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Exhibit 2.8
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NET DAEMONS ASSOCIATES, INC., THE SHAREHOLDERS PARTY HERETO,
AND
SAGE NETWORKS, INC.
AND
SAGE NDA ACQUISITION CORP.
DATED AS OF FEBRUARY 17, 1999
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TABLE OF CONTENTS
PAGE
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Article I. THE MERGER.......................................................................................2
Section 1.01 The Merger................................................................................2
Section 1.02 The Closing...............................................................................2
Section 1.03 Effective Time............................................................................2
Section 1.04 Purposes of Surviving Corporation.........................................................2
Section 1.05 Capitalization of the Surviving Corporation...............................................2
Section 1.06 Articles of Organization..................................................................3
Section 1.07 By-Laws...................................................................................3
Section 1.08 Directors of the Surviving Corporation....................................................3
Article II. CONVERSION AND EXCHANGE OF STOCK................................................................3
Section 2.01 Merger Sub Stock..........................................................................3
Section 2.02 Company Stock.............................................................................3
Article III. FURTHER COOPERATION............................................................................4
Section 3.01 Further Cooperation.......................................................................4
Article IV. REPRESENTATIONS AND WARRANTIES..................................................................4
Section 4.01 Representations and Warranties of the Primary Shareholders................................4
Section 4.02 Representations of Sage and Merger Sub...................................................13
Section 4.03 Representations and Warranties of the Shareholders.......................................15
Article V. CERTAIN COVENANTS...............................................................................16
Section 5.01 Survival of Representations and Warranties; Indemnification..............................16
Section 5.02 Company Audit............................................................................19
Section 5.03 Timeclock................................................................................19
Section 5.04 Cancellation of Company Stock Options....................................................19
Section 5.05 Certain Transaction Related Fees.........................................................19
Section 5.06 Sale of Company Motor Vehicles...........................................................19
Section 5.07 Conduct of Business Pending Closing......................................................20
Section 5.08 Post Closing Adjustment..................................................................20
Section 5.09 Closing of Company Bank Accounts.........................................................21
Article VI. CONDITIONS TO CLOSING; DELIVERIES AT CLOSING...................................................21
Section 6.01 Conditions of Sage and Merger Sub........................................................21
Section 6.02 Conditions of Shareholders...............................................................23
Article VII. OBLIGATIONS FOLLOWING CLOSING.................................................................24
Section 7.01 Taxes. 24
Article VIII. MISCELLANEOUS................................................................................24
Section 8.01 Governing Law; Jurisdiction..............................................................24
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Section 8.02 Counterparts.............................................................................25
Section 8.03 Confidentiality..........................................................................25
Section 8.04 Entire Agreement; Amendments.............................................................25
Section 8.05 Severability.............................................................................25
Section 8.06 Benefit; Assignment......................................................................25
Section 8.07 Construction.............................................................................25
Section 8.08 Imputed Knowledge........................................................................26
Section 8.09 Notices..................................................................................26
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AGREEMENT AND PLAN OF MERGER
AGREEMENT made as of this 17th day of February, 1999 by and
among NET DAEMONS ASSOCIATES, INC., a Massachusetts corporation with a principal
place of business at 000 Xxxx Xxxxxxxx Xxxx, #0000, Xxxxxx, XX 00000 (the
"Company"), each of the individuals identified under the caption "SHAREHOLDERS"
on the signature pages hereto (collectively, the "Shareholders"), SAGE NETWORKS,
INC., a Delaware corporation having an office at 000 Xxxxx Xxxxxx, Xxxxxxxxx, XX
00000 ("Sage"), and Sage NDA Acquisition Corp., a Massachusetts corporation and
a wholly owned subsidiary of Sage having an office at 000 Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000 ("Merger Sub").
W I T N E S S E T H :
WHEREAS, the Shareholders are the holders of all of the
outstanding shares of the authorized capital stock of the Company;
WHEREAS, the Company conducts an outsourced network services
and information technology consulting business (hereinafter, the "Business");
WHEREAS, the Company and Sage have determined that a business
combination between the Company and Sage is in the best interests of their
respective companies and shareholders and presents an opportunity for their
respective companies to achieve long-term strategic and financial benefits, and
accordingly have agreed to effect the merger provided for herein upon the terms
and subject to the conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes,
the merger provided for herein shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, Merger Sub is a wholly owned subsidiary of Sage and
has been formed solely to facilitate the Merger (as defined herein) and has
conducted and will conduct no business or activity other than in connection with
the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by all parties, the
parties hereto agree as follows:
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ARTICLE I.
THE MERGER
SECTION 1.01 THE MERGER.
Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.03), Merger Sub shall be merged with and
into the Company in accordance with this Agreement, and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger"). The Company shall
be the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and will be a wholly owned subsidiary of Sage. The
Merger shall have the effects specified in the Massachusetts Business
Corporation Law (the "MBCL".
SECTION 1.02 THE CLOSING.
Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place on or before February 17,
1999 at the offices of Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at 10:00 a.m. New York time, or as otherwise mutually
agreed upon by the parties (the "Closing Date").
SECTION 1.03 EFFECTIVE TIME.
If all the conditions set forth in Article VI shall have been
fulfilled or waived in accordance herewith, the parties hereto shall cause
Articles of Merger meeting the requirements of Section 78 of the MBCL to be
properly executed and filed in accordance with such Section on the Closing Date.
The Merger shall become effective at the time of filing of such Articles of
Merger with the Secretary of State of the Commonwealth of Massachusetts in
accordance with the MBCL or at such later time which the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Merger (the "Effective Time").
SECTION 1.04 PURPOSES OF SURVIVING CORPORATION.
The purposes of the Surviving Corporation shall be the
purposes set forth in the Articles of Organization of the Merger Sub in effect
immediately prior to the Effective Time.
SECTION 1.05 CAPITALIZATION OF THE SURVIVING CORPORATION.
The capitalization of the Surviving Corporation shall be as
set forth in the Articles of Organization of the Merger Sub in effect
immediately prior to the Effective Time.
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SECTION 1.06 ARTICLES OF ORGANIZATION.
After the Effective Time, the Articles of Organization of the
Surviving Corporation shall be amended and restated in their entirety to read as
the Articles of Organization of Merger Sub as in effect immediately prior to the
Effective Time, except that the Articles of Organization of the Surviving
Corporation shall provide that the name of the corporation be "Net Daemons
Associates, Inc.".
SECTION 1.07 BY-LAWS.
The By-laws of the Merger Sub, as in effect immediately prior
to the Effective Time, shall be the By-laws of the Surviving Corporation until
duly amended in accordance with applicable law.
SECTION 1.08 DIRECTORS OF THE SURVIVING CORPORATION.
The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation as of the Effective
Time and until their successors are duly appointed or elected in accordance with
applicable law.
ARTICLE II.
CONVERSION AND EXCHANGE OF STOCK
SECTION 2.01 MERGER SUB STOCK.
At the Effective Time, each share of common stock, $.01 par
value, of Merger Sub outstanding immediately prior to the Effective Time shall
be converted into and exchanged for 12,075 validly issued, fully paid and
non-assessable shares of common stock, $.01 par value, of the Surviving
Corporation.
SECTION 2.02 COMPANY STOCK.
(a) At the Effective Time, each share of common stock, $.01
par value of the Company Stock (the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive such number of shares of common stock, $.01 par value,
of Sage ("Sage Common Stock") and cash as set forth on Exhibit A hereto (the
"Exchange Consideration").
(b) As a result of the Merger and without any action on the
part of the holder thereof, at the Effective Time, all shares of Company Common
Stock outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall cease to exist, and each holder of shares of Company
Common Stock thereafter cease to have any rights with respect of such shares of
Company Common Stock, except the right to receive the Exchange Consideration
upon the surrender of a certificate representing such shares of Company Common
Stock.
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(c) Each share of Company Common Stock issued and held in the
Company's treasury at the Effective Time shall, by virtue of the Merger, cease
to be outstanding and shall be canceled and retired and shall cease to exist
without payment of any consideration therefor.
(d) All options to purchase capital stock of the Company
outstanding, whether or not exercisable and whether or not vested under the
Company's stock option plan shall be cancelled by the Company on or prior to the
Closing Date.
ARTICLE III.
FURTHER COOPERATION
SECTION 3.01 FURTHER COOPERATION.
The parties agree that, at any time and from time to time
after the Closing Date, they will cooperate for purposes of carrying out the
transfer of the Company and the Business to Sage.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE PRIMARY SHAREHOLDERS.
Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxxxxxx (the "Primary
Shareholders"), jointly and severally, represent and warrant to Sage as follows:
(a) Organization; Good Standing; Stock Ownership;
Capitalization.
(i) The Company is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation as set forth on Exhibit A, and has the corporate power
and authority to own or lease its properties and to conduct its
business as currently conducted, and the Company is qualified and in
good standing as a foreign corporation authorized to do business in all
jurisdictions where failure to qualify would have a material adverse
effect on the Company or the conduct of the Business by the Company
after the Closing Date. The Company maintains offices only at the
site(s) listed on Exhibit A and has no operations other than from those
site(s).
(ii) Other than the Shareholders, no other person or
entity has ever been a shareholder of the Company.
(iii) The Company's authorized capital consists
exclusively of (a) 2,578,611 shares of common stock, $.01 par value,
1,207,500 shares of which are issued and outstanding, (b) 21,389 shares
of preferred stock, $.01 par value, none of which are issued and
outstanding, and (c) 855,000 shares of treasury stock. All of
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the outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and non-assessable. As of
the Closing Date, there will be no existing options, calls or
commitments of any character whatsoever, or agreements to grant the
same, relating to the Company's capital stock other than the treasury
stock that constitutes a portion of the collateral for the Company's
Subordinated Promissory Note to Xxxxxxxxxxx Xxxxxxxx dated December 19,
1997 and presently outstanding in the aggregate principal amount of
$855,214 (the "Xxxxxxxx Note"). The Company has no outstanding
securities convertible into or exchangeable or exercisable for any
shares of common stock or any options, calls or commitments of any
character whatsoever with respect to the issuance of such convertible
securities except the Company's employee stock options outstanding in
the aggregate amount of 199,260 (the "Employee Options") which will be
terminated prior to the Closing Date. The Company owns no equity
interests, convertible securities, marketable securities, notes or
other obligations evidenced by written instruments of any other firm or
entity. The Company has no subsidiaries.
(b) Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement has been authorized and approved by
all requisite corporate and other action on the part of the Company, and no
other corporate or other approval or authorization is required on the part of
the Company, any trustee or any other person by law or otherwise in order to
make this Agreement the valid, binding and enforceable obligations of the
Company. This Agreement is enforceable against the Company in accordance with
its terms. Set forth on Exhibit 4.01(b) is a list of officers and directors of
the Company, all trade names used by the Business and all jurisdictions in which
the Business is conducted.
(c) The Company's Assets.
(i) All cash on hand of the Company as of the Closing
shall be referred to herein as the "Closing Cash". All of the
outstanding accounts receivable of the Company as of February 11, 1999,
shall be referred to herein collectively as the "Closing Accounts
Receivable". Set forth on Exhibit 4.01(c)(i)(1) is the amount of
Closing Cash. Attached hereto as Exhibit 4.01(c)(i)(2) is a true and
correct aged list of all Closing Accounts Receivable, and each of the
accounts listed is valid and arose in the ordinary course of the
Business and is fully collectible to the extent of 95% thereof, except
for the amount reserved as doubtful accounts on the Closing Balance
Sheet.
(ii) All vendor and customer contracts,
confidentiality agreements, purchase and sales orders, powers of
attorney, undertakings, commitments and other agreements currently in
effect to which the Company is a party, whether written or oral, shall
be referred to herein collectively as the "Business Agreements". The
Company has delivered to Sage, on or before the Closing Date, true and
correct copies of all written Business Agreements and detailed
summaries of all oral Business Agreements. Attached hereto as Exhibit
4.01(c)(ii)(1) are true and correct copies of the only forms of
agreements currently in effect which have been entered
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into between the Company and its Customers (as hereinafter defined).
Also attached as part of Exhibit 4.01(c)(ii)(1) is a schedule stating
the identity of the Customer to each of those agreements which are in
force and effect as of the Closing Date, together with a designation of
which form of agreement each such Customer has entered into. All
Customers have entered into one of the Company's forms of agreement,
except as disclosed on Exhibit 4.01(c)(ii)(1). Annexed as Exhibit
4.01(c)(ii)(2) is a detailed summary of all oral Business Agreements,
as well as a copy of all written Business Agreements of the Company
other than agreements with Customers and Business Agreements referred
to on other Exhibits hereto. None of the oral Business Agreements
listed in Exhibit 4.01(c)(ii)(2) imposes substantial liability upon the
Company and each may be terminated at will or upon notice of no greater
than 30 days. Listed on Exhibit 4.01(c)(ii)(3) is a description of each
and every real estate, equipment and personal property lease
(collectively, the "Leases") to which the Company is a party. The
Leases are also included within the definition of Business Agreements
as said term is used herein. The Company is not and, to the best of the
Primary Shareholders' knowledge, no other party is in default in any
material respect under any Business Agreement and no other party to any
Business Agreement has made any claim or given the Company notice of
any dispute under any Business Agreement, except as set forth on
Exhibit 4.01(c)(ii)(4). Each Business Agreement is in full force and
effect and the Company has obtained all required consents to permit the
Company to continue to be a party to and enforce the Business
Agreements after the Closing of the sale of the Company Common Stock to
Sage hereunder, except as set forth on Exhibit 4.01(c)(ii)(5). On the
Closing Date, the Company will not be the owner or lessee of any motor
vehicles. The Company does not own or lease any interest in any real
property or lease any equipment used, except as expressly stated on
Exhibit 4.01(c)(ii)(3).
(iii) All of the tangible assets of the Company,
including, without limitation, all machinery, office and other
equipment, furniture, computers and related equipment, business
machines and telephones, telephone systems, parts and accessories
presently utilized by the Company, shall be referred to herein
collectively as the "Tangible Assets". Attached hereto as Exhibit
4.01(c)(iii) is a true and correct list or description of the Tangible
Assets as of January 31, 1999. As of the Closing Date, each of the
material Tangible Assets is in good and operable condition, reasonable
wear and tear excepted.
(iv) All patents, trademarks, trade names, service
marks, service names, logos, designs, formulations, copyrights and
other trade rights and all registrations and applications therefor, all
know-how, trade secrets, technology or processes, research and
development, all telephone numbers, facsimile numbers, e-mail addresses
and Internet domain addresses, all Web sites and all computer programs,
control panels, surcharge calculators, data bases and software
documentation owned or used by the Company, if any, other than
off-the-shelf software licensed by the Company, shall be referred to
herein collectively as the "Intellectual Property". There are no
Internet domain addresses of Customers parked on the Company's servers.
The "Intellectual Property" comprises all intellectual
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property rights necessary for the conduct of the Business as currently
conducted. Attached hereto as Exhibit 4.01(c)(iv) is a true and correct
list of all of the Intellectual Property (and where practicable, a copy
thereof). Exhibit 4.01(c)(iv) also indicates which of such items have
been patented or registered or are in the process of application for
same. Except as otherwise set forth in Exhibit 4.01(c)(iv), the Company
is the sole owner, free of any lien or encumbrance, of all the
Intellectual Property listed in Exhibit 4.01(c)(iv). The Company has
taken, and will take up to the Closing Date, all necessary and
reasonable actions to protect its rights in Intellectual Property owned
by it. The Company's rights in the Intellectual Property are valid and
enforceable in the United States of America. Except as disclosed on
Exhibit 4.01(c)(iv), the Company has received no demand, claim, notice
or inquiry from any person in respect of the Intellectual Property
which challenges, threatens to challenge or inquires as to whether
there is any basis to challenge, the validity of, or the rights of the
Company in, the Intellectual Property, and the Primary Shareholders
know of no basis for any such challenge. To the best knowledge of the
Primary Shareholders, the Company is not in violation or infringement
of, and has not violated or infringed, any intellectual property rights
of any other person. To the best knowledge of the Primary Shareholders,
no third party is infringing on the rights of the Company in and to the
Intellectual Property. Except on an arm's-length basis for value and
other commercially reasonable terms, the Company has not granted any
license with respect to the Intellectual Property to any person. Also
attached to Exhibit 4.01(c)(iv) is a true and complete list of all
software licensed by the Company and used in operating and maintaining
the Business (collectively, the "Licensed Software"). The Company has
valid, royalty free and fully-paid licenses for all of the Licensed
Software.
(v) Set forth on Exhibit 4.01(c)(v) is a true and complete
copy of the Company's customer list as of the Closing Date which
includes, in the case of each customer, the name of the customer, its
billing address, identity and contact information of each relevant
contact person, a statement of the monthly or annual (as indicated)
service charges relating to such customer (the "Customer List"). All
files regarding each customer on the Customer List have been made
available to Sage. All customers of the Company, including, without
limitation, those customers included on the Customer List shall be
referred to herein as the "Customers".
(vi) As used herein, the term "the Company's Assets" shall be
defined as all assets of the Company, including without limitation all
classes of assets shown on the balance sheet included in the Company's
audited financial statements as of and for the period ended December
31, 1998 (annexed as Exhibit 4.01(c)(vi)(1)), the Closing Cash, the
Closing Accounts Receivable, the Business Agreements, the Tangible
Assets, the Intellectual Property, together with all goodwill
associated with and symbolized by the trademarks, trade names, service
marks, service names and logos included therein, the Customer List, the
Customers, the Software Licenses and all other assets of the Company
used in connection with the operation of the Business, together with
the good will and business opportunities of the Company as it relates
to the Business or otherwise, other than Timeclock (as
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defined below), wherever located, tangible or intangible, including,
without limitation, all rights the Company may have under any insurance
policies, and all books, records and files (whether in paper or
electronic format). The Company's Assets are not subject to any lien or
encumbrance of any character whatsoever except as set forth on Exhibit
4.01(c)(vi)(2) . Neither the Company nor any Primary Shareholder has
received any notice of any adverse claims by any third parties with
respect to the Company's Assets, nor to the best of the Primary
Shareholders' knowledge, are they aware of any such adverse claim. The
Company's Assets include all rights, properties, interests and assets
used by the Company and/or necessary to permit the Company to carry on
the Business as presently conducted by the Company.
(vii) The Company and the Primary Shareholders reasonably
expect that the business represented by the Business Agreements will
continue after the date hereof subject to normal customer turnover.
Neither the Primary Shareholders nor the Company has any knowledge that
any Customers, other than those listed on Exhibit 4.01(c)(vii), intend
to terminate their relationship with the Company or significantly
reduce the amount of business they presently do with the Company.
(viii) Not more than five percent of the revenues of the
Business are derived from business that is dependent on any portion of
the equity of the Company being owned by minorities or women.
(d) Financial Statements. The Company has delivered to Sage
copies of the Company's audited financial statements for the fiscal years of the
Company ended December 31, 1997 and 1998 (the "Financial Statements", which are
annexed as Exhibit 4.01(d)(1)), respectively, each of which reflect the assets,
liabilities, net worth, profit and loss, and cash flow of the Company at the
date of such statements and for the period then ended. The Financial Statements
are complete and correct in all material respects and present fairly the
financial condition and results of operations of the Company as at the dates of
such Financial Statements and have been prepared in accordance with generally
accepted accounting principles. Except as set forth in the Financial Statements
or incurred in the ordinary course of business since December 31, 1998, the
Company has no material liabilities or obligations of any kind (whether accrued,
absolute, direct, indirect, contingent or otherwise) which are not otherwise
disclosed in this Agreement. The books of account and records of the Company
have been maintained in accordance with good business practice and reflect
fairly all properties, assets, liabilities and transactions of the Company.
Except as set forth on Exhibit 4.01(d)(2), the Company has no bad debts as of
the Closing Date. Since the last day of the Company's last fiscal year, the
Company has conducted its business, including, without limitation, the Business,
only in the ordinary and usual course and has not experienced any material
adverse change in the Business or the financial condition of the Company. Since
December 31, 1998, there has not been any change in the number of shares of
capital stock of the Company issued or outstanding or any declaration, setting
aside, or payment of any dividend or other distribution (whether in cash,
securities, property or otherwise) in respect of the Company's capital stock.
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(e) Existing Employment Arrangements.
(i) Except as set forth on Exhibit 4.01(e) or in the Financial
Statements, the Company has no employment agreements, and there are no
employee benefit or compensation plans, agreements, arrangements or
commitments (including, but not limited to, "employee benefit plans,"
as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), maintained by the Company for any
employees of the Company or with respect to which the Company has
liability, or makes or has an obligation to make contributions
("Employee Plans").
(ii) Each Employee Plan that is an employee welfare benefit
plan as defined under Section 3(1) of ERISA is funded through an
insurance company contract. Each Employee Plan by its terms and
operation is in compliance with all applicable laws and all required
filings with respect to Employee Plans have been made. Neither the
Company nor any entity that is or was at any time treated as a single
employer with the Company under Section 414(b), (c) (m) or (o) of the
Code has at any time maintained, contributed to or been required to
contribute to, or has any liability with respect to, any plan subject
Title IV of ERISA. The events contemplated by this Agreement (either
alone or together with any other event) will not (w) entitle any
employees to severance pay, unemployment compensation, or other similar
payments under any Employee Plan or law, (x) accelerate the time of
payment or vesting or increase the amount of benefits due under any
Employee Plan or compensation to any Company employees except the
accelerated payments with respect to the stock options granted by the
Company to its employees ("Employee Stock Options") and with respect to
the acceleration of vesting under the Company's profit sharing plan or
(y) result in any payments (including parachute payments) under any
Employee Plan or law becoming due to any employee. Also set forth on
Exhibit 4.01(e) is a true and complete list of all employees of the
Company employed, which list provides, among other things, the name,
residence address, title, job description and salary information
concerning each employee.
(iii) The Company is in substantial compliance with all
applicable Federal, state and local and regulations respecting
employment and employment practices, and terms and conditions of
employment and wages and hours; no collective bargaining agreement
presently covers (nor has any, in the past five years, covered) any
employees of the Company in connection with their employment by the
Company, nor is any currently being negotiated with respect to the
Company; there is no unfair labor practice complaint against the
Company pending before the National Labor Relations Board or any
comparable state or local agency; there is no labor strike, dispute,
slowdown, stoppage or organizational effort actually pending or, to the
best knowledge of the Primary Shareholders, threatened against or
involving the Company and the Company is not delinquent in payments for
compensation or reimbursement for expenses or otherwise (including,
without limitation, salaries, commissions and bonuses) to any of its
employees, agents, representatives or consultants for any services
performed by them. There are no
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complaints, charges or claims against the Company pending, or, to the
Primary Shareholders' knowledge, threatened to be brought or filed,
with any governmental entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination
of employment of any individual by the Company.
(iv) The Company provided Sage with (x) copies of all Employee
Benefit Plans or, in the case of an unwritten plan, a written
description thereof, (y) copies of the most current annual or financial
reports and (z) copies of the most current summary plan descriptions
relating to such Employee Benefit Plans.
(v) All contributions or payments owed with respect to any
periods prior to the Closing Date under any Employee Benefit Plan have
been made, or have been appropriately accrued.
(vi) There are no actions, suits or claims pending or
threatened (other than routine noncontested claims for benefits) or, to
the Primary Shareholders' knowledge, no set of circumstances exist
which may reasonably give rise to such a claim against any Employee
Benefit Plan or administrator or fiduciary of any such Employee Benefit
Plan.
(vii) Neither the Company nor any other person, including any
fiduciary, has engaged in any "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA), which could subject
the Company to any tax or penalty imposed under Section 4975 of the
Code or Section 502 of ERISA.
(f) Claims, Litigation, Disclosure. Except as set forth on
Exhibit 4.01(f) there is no claim, litigation, tax audit, proceeding or
investigation pending or, to the Company's or any Primary Shareholder's
knowledge, threatened against the Company, with respect to the Business or any
of the assets of the Company (including, without limitation, any claims of
infringement or actions of opposition with respect to Intellectual Property),
nor does the Company nor any Primary Shareholder know of any facts which would
provide a basis for any such claim, litigation, audit, proceeding or
investigation.
(g) Taxes. Except as specifically set forth on Exhibit 4.01(g)
(the "Tax Liabilities"), the Company has correctly prepared and filed all
Federal, state and local tax returns, estimates and reports, and paid all such
taxes as and when due or past due with appropriate penalties and interest. For
purposes of this paragraph and Section 7.03, taxes shall mean all taxes,
charges, fees, levies or other assessments of any kind whatsoever (including,
without limitation, income, franchise, sales, use and withholding taxes). The
Company is not a party to any tax sharing agreement.
(h) No Other Agreements to Sell Assets or Business. Except for
the Employee Stock Options, the Existing Shareholders Agreements and the
Xxxxxxxx Note, the Company is not a party to any existing agreement which
obligates the Company or the Primary Shareholders to sell to any other person or
firm the Company's Assets (other than sales in the ordinary course of business
and except as provided in Sections 5.03 and 5.06), to issue or sell any capital
stock or any security convertible into or exchangeable for capital
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stock of the Company or to effect any merger, consolidation or other
reorganization of the Company or to enter into any agreement with respect
thereto.
(i) No Brokers. The only broker, leasing agent, finder or
similar person or entity with whom the Company has made contact or had any
dealings with or entered into any agreement, arrangement or understanding with
concerning this Agreement and to whom the Company is responsible to pay a
finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated by this Agreement is the party or parties listed in
item 6 on Exhibit A, if any, and the Primary Shareholders shall be solely
responsible for the payment of any such fee, commission or payment.
(j) Environmental Compliance.
(i) To the best knowledge of the Primary
Shareholders, neither the Company nor any operator of the Company's
properties is in violation, or alleged to be in violation, of any
federal, state or local judgment, decree, order, consent agreement, law
(including common law), license, rule or regulation pertaining to
environmental health or safety matters, including, without limitation,
those arising under the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, as amended, Water Act, as amended, the
Federal Clean Air Act, as amended, the Toxic Substances Control Act, or
any state or local analogue (hereinafter "Environmental Laws").
(ii) Neither the Company nor any Primary Shareholder
has received a notice, complaint, order, directive, claim or citation
from any third party, including, without limitation, any federal, state
or local governmental authority, indicating or alleging that the
Company or any predecessor may have any liability or obligation under
any Environmental Law.
(iii) To the best of Primary Shareholders' knowledge
(A) no portion of the property of the Company has been used by any
person for the generation, handling, processing, treatment, storage or
disposal of Hazardous Materials except in accordance with applicable
Environmental Laws; (B) no underground tank or other underground
storage receptacle for Hazardous Materials, asbestos-containing
materials or polychlorinated biphenyls are located on any portion of
any location occupied by the Company each of which is listed as a Site
on Exhibit A; (C) in the course of any activities conducted by the
Company or its invitees, agents, contractors, licensees or employees in
connection with the Business of the Company, no Hazardous Materials
have been generated or are being used except in accordance with
applicable Environmental Laws; and (D) there have been no releases
(i.e., any past or present releasing, spilling, leaking, leaching,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Materials on,
upon, into or from the property currently or formerly owned, operated
or leased by the Company, which releases
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would have a material adverse effect on the value of any of the
property or adjacent properties or the environment.
(iv) The execution, delivery and performance of this
Agreement is not subject to any Environmental Laws which condition,
restrict or prohibit the sale, lease or other transfer of property or
operations, including, without limitation, any so-called "environmental
cleanup responsibility acts" or requirements for the transfer of
permits, approvals, or licenses. To the best of the Primary
Shareholders' knowledge, there have been no environmentally related
audits, studies, reports, analyses (including soil and groundwater
analyses), or investigations of any kind performed with respect to the
currently or previously owned, leased, or operated properties of the
Company.
For purposes of this Agreement, "Hazardous Material" shall
mean any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any hazardous
substances or wastes as defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section 9601(33) or any toxic substances or
wastes, oil or hazardous materials or other chemicals or substances regulated by
any public or governmental authority.
(k) [reserved].
(l) Credit Card and Bank Accounts. Set forth on Exhibit
4.01(l)(1), is a true and complete list of the Company's employees whom have
been issued a Company credit and/or debit card, including the type of card and
account number. Set forth on Exhibit 4.01(l)(2), is a true and complete list of
the Company's bank accounts and the authorized signatories for said accounts.
(m) Licenses and Compliance with Laws. Except as specifically
set forth on Exhibit 4.01(m), the Company holds no material governmental or
regulatory licenses, permits, consents or approvals in connection with the
Business or otherwise, and the Company is in compliance, in all material
respects, with all applicable laws and regulations.
(n) Tax Reorganization. There has been no action or omission
by the Company which would prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
(o) Net Worth. The net worth of the Company as of the Closing
Date will be not less than negative $207,000. For purposes of this Section only,
any extraordinary accounting fees incurred by the Company related to obtaining
on an expedited basis for purposes of this Agreement only the audited financial
statements for the fiscal years 1997 or 1998 shall not be included in the
computation of net worth.
(p) True and Complete. No representation or warranty made by
the Company or the Primary Shareholders in this Agreement, nor any statement,
certificate or Exhibit furnished by or on behalf of Company pursuant to this
Agreement, nor any document or certificate delivered to Sage pursuant to this
Agreement, or in connection with the transactions contemplated hereby, contains
or shall contain any untrue statement of a
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material fact, or omits or shall omit to state a material fact necessary to make
the statements contained therein not misleading. Neither the Company nor any
Primary Shareholder has failed to disclose to Sage any pending developments or
circumstances of which it is aware which are reasonably likely to have a
material adverse effect on the Business.
SECTION 4.02 REPRESENTATIONS OF SAGE AND MERGER SUB.
Sage and Merger Sub, jointly and severally, represent and
warrant to the Company as follows:
(a) Corporate Matters; No Conflict. Each of Merger Sub and
Sage is duly incorporated, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each of Merger Sub and Sage is in good
standing in each other jurisdiction in which it is doing business, except where
failure to be in good standing would not have a material adverse effect on the
business of Merger Sub or Sage and each has the corporate power to enter into
this Agreement, to perform its obligations hereunder and to conduct its business
as currently conducted. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby by Merger Sub and Sage,
respectively, will not (i) conflict with or violate the provisions of any
applicable law, rule or order or Merger Sub's or Sage's respective
organizational documents or By-laws, (ii) conflict with or constitute a default
under any agreement or contract by which Merger Sub or Sage or any of their
respective assets is bound or (iii) require the consent or approval of, or
filing with, any governmental body or third party. On the Closing Date, the
execution, delivery and performance by Merger Sub and Sage, respectively, of
this Agreement will have been authorized and approved by all requisite corporate
action on the part of Merger Sub and Sage and this Agreement will be enforceable
against Sage and Merger Sub in accordance with its terms.
(b) Capitalization. The authorized capital stock of Sage
consists of 37,647,658 shares of capital stock of which 35,000,000 have been
designated common stock, $.01 par value, of which 26,407,197 shares are issued
and outstanding and 2,647,658 have been designated Series A Convertible
Preferred Stock, $.01 par value (the "Preferred Stock"), all of which is issued
and outstanding. Sage has issued Warrrants dated January 28, 1999 (the
"Warrants") for the purchase of 749,625 shares common stock. Sage has issued
options (the "Options") for the purchase of approximately 440,500 shares common
stock. Sage has reserved for issuance 1,500,000 shares of common stock upon
conversion of the Preferred Stock or exercise of the Warrants or the Options.
The authorized capital stock of Merger Sub consists of 100 shares of common
stock, $.01 par value, all of which shares are issued and outstanding and owned
by Sage. All of the outstanding shares of capital stock of Sage and Merger Sub
have been duly authorized and are validly issued, fully paid and non-assessable.
Upon issuance in accordance with this Agreement, the Sage common stock
constituting a portion of the Exchange Consideration will be duly authorized,
fully paid and non-assessable and free and clear of all liens and encumbrances.
Merger Sub has not engaged in any activities other than in connection with the
transactions contemplated by this Agreement.
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(c) Tax Reorganization. There has been no action or omission
by Sage or its subsidiaries which would prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
(d) No Brokers. The only broker, leasing agent, finder or
similar person or entity with whom Merger Sub or Sage has made contact or had
any dealings with or entered into any agreement, arrangement or understanding
with concerning this Agreement and to whom Merger Sub and/or Sage is responsible
to pay a finder's fee, brokerage commission or similar payment to is the party
listed in item 7 on Exhibit A, if any, and Sage shall be solely responsible for
the payment of any such fee, commission or payment.
(e) Claims, Litigation, Disclosure. Except for investigations
by governmental and quasi governmental entities relating to the use by customers
of Web sites which are hosted by Sage or its subsidiaries, there is no claim,
litigation, tax audit, proceeding or investigation pending or, to Sage's
knowledge, threatened against the Sage or any of its assets (including, without
limitation, any claims of infringement or actions of opposition with respect to
Intellectual Property), nor does Sage know of any facts which would provide a
basis for any such claim, litigation, audit, proceeding or investigation.
(f) Licenses and Compliance with Laws. Sage holds no material
governmental or regulatory licenses, permits, consents or approvals in
connection with its business or otherwise, and the Company is in compliance, in
all material respects, with all applicable laws and regulations.
(g) Environmental Compliance.
(i) To the best knowledge of Sage, neither Sage nor
any operator of Sage's properties is in violation, or alleged to be in
violation, of any federal, state or local judgment, decree, order,
consent agreement, law (including common law), license, rule or
regulation pertaining to environmental health or safety matters,
including, without limitation, those arising under any Environmental
Laws.
(ii) Sage has not received a notice, complaint,
order, directive, claim or citation from any third party, including,
without limitation, any federal, state or local governmental authority,
indicating or alleging that Sage or any predecessor may have any
liability or obligation under any Environmental Law.
(iii) To the best of Sage's knowledge (A) no portion
of its property has been used by any person for the generation,
handling, processing, treatment, storage or disposal of Hazardous
Materials except in accordance with applicable Environmental Laws; (B)
no underground tank or other underground storage receptacle for
Hazardous Materials, asbestos-containing materials or polychlorinated
biphenyls are located on any portion of any location occupied by Sage;
(C) in the course of any activities conducted by Sage or its invitees,
agents, contractors, licensees or employees in connection with its
business, no Hazardous Materials have been generated or are being used
except in accordance with applicable Environmental Laws; and (D) there
have been no releases (i.e., any past or present
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releasing, spilling, leaking, leaching, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Materials on, upon, into or from the
property currently or formerly owned, operated or leased by Sage, which
releases would have a material adverse effect on the value of any of
the property or adjacent properties or the environment.
(iv) The execution, delivery and performance of this
Agreement is not subject to any Environmental Laws which condition,
restrict or prohibit the sale, lease or other transfer of property or
operations, including, without limitation, any so-called "environmental
cleanup responsibility acts" or requirements for the transfer of
permits, approvals, or licenses. To the best of Sage's knowledge, there
have been no environmentally related audits, studies, reports, analyses
(including soil and groundwater analyses), or investigations of any
kind performed with respect to the currently or previously owned,
leased, or operated properties of Sage.
SECTION 4.03 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each Shareholder, severally as to itself, represents and
warrants to Sage as follows:
(a) Stock Ownership.
(i) The Shareholders are all the beneficial and/or
record owners of the issued and outstanding shares of capital stock of
the Company and the Shareholders own the number of shares of such stock
set forth opposite his or her name on Exhibit A. The Shareholders are
the beneficial and record owners of the Company's capital stock, free
and clear of any liens, encumbrances or restrictions on transfer of any
nature whatsoever other than the obligations of Shareholders arising
under this Agreement to sell the Company's capital stock to Sage and
other than the existing shareholders agreements (the "Existing
Shareholders Agreements") which will be terminated prior to the Closing
Date. Except for this Agreement and the transactions contemplated
hereby, no Shareholder has any legal obligation, absolute or
contingent, to any person or firm to sell the Company's capital stock
or to enter into any agreement with respect thereto except as
contemplated by the Existing Shareholders Agreements.
(b) Corporate Authorization. The execution, delivery and
performance by each Shareholder of this Agreement has been authorized and
approved by all requisite corporate and other action on the part of such
Shareholder, and no other corporate or other approval or authorization is
required on the part of any Shareholder, any trustee or any other person by law
or otherwise in order to make this Agreement the valid, binding and enforceable
obligations of such Shareholder. This Agreement is enforceable against each
Shareholder in accordance with its terms.
(c) No Brokers. There is no broker, leasing agent, finder or
similar person or entity with whom the Shareholders have made contact or had any
dealings or entered into any agreement, arrangement or understanding with
concerning this Agreement
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and to whom any Shareholder is responsible to pay a finder's fee, brokerage
commission or similar payment in connection with the transactions contemplated
by this Agreement.
(d) Common Stock. Each Shareholders each acknowledges that he
has received and reviewed the Confidential Memorandum dated March 12, 1998, as
amended February 9, 1999 (the "Offering"), describing the offering by Sage of up
to 4,800,000 shares of Sage Common Stock to persons or entities who sell Web
hosting businesses to Sage or its affiliates. The Shareholders each understand
that the Sage Common Stock to be issued by Sage to the Shareholders hereunder as
part of the Exchange Consideration shall be subject to the terms of the
Offering, including, without limitation, that the Sage Common Stock shall be
issued subject to a Right of First Refusal Agreement, the form of which is
annexed as an exhibit to the Offering.
ARTICLE V.
CERTAIN COVENANTS
SECTION 5.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
(a) The representations and warranties of the parties herein
contained shall survive the closing of the purchase contemplated by this
Agreement, notwithstanding any investigation at any time made by or on behalf of
the other party, provided that any claims for indemnification in accordance with
this Section 5.01 with respect to any representation or warranty must be made
(and will be null and void unless made) on or before the date eighteen (18)
months following the Closing Date (except in the case of representations
contained in Section 4.01(c)(v), (g), (i) and (j) and Section 4.02(d) and (g),
which must be made within six (6) months following the expiration of the
applicable statute of limitations).
(b) The Primary Shareholders, jointly and severally, hereby
agree to indemnify and hold Sage and its officers, directors, stockholders,
affiliates, employees, representatives and other agents harmless from and
against any and all claims, liabilities, losses, damages or injuries, together
with costs and expenses, including reasonable legal fees, arising out of or
resulting from (i) any breach, material misrepresentation or material omission
of the representations and warranties made by the Primary Shareholders in this
Agreement or in any Exhibit hereto or other documents delivered in connection
herewith (other than the Employment Agreements (hereafter defined)), (ii) any
breach in any material respect by the Company and/or the Shareholders, or any of
them, unless waived in writing by Sage, of any covenant or agreement contained
in or arising out of this Agreement, or any other agreement delivered in
connection herewith on the Closing Date (other than the Employment Agreements),
(iii) any and all liabilities of the Company arising prior to the Closing Date
except (x) as set forth on the audited financial statements of the Company as at
and for the period ended December 31, 1998, (y) as set forth on the Closing
Balance Sheet or (z) as otherwise disclosed in the Exhibits to this Agreement
and (iv) one-half of any and all liabilities in excess of an aggregate amount
equal to $75,000 of Sage or the Company with respect to or resulting from the
failure of the information technology used in the
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Business to accurately process date and time data (including, but not limited
to, calculating, comparing and sequencing) from, into and between the years 1999
and 2000 and the twentieth century and the twenty-first century, including leap
year CALCULATIONS. Each Shareholder, severally, hereby agrees to indemnify and
hold Sage and its officers, directors, stockholders, affiliates, employees,
representatives and other agents harmless from and against any and all claims,
liabilities, losses, damages or injuries, together with costs and expenses,
including reasonable legal fees, arising out of or resulting from any breach,
misrepresentation or omission of the representations and warranties made by such
Shareholder in Section 4.03. Each Primary Shareholder, severally, hereby agrees
to indemnify and hold Sage and its officers, directors, stockholders,
affiliates, employees, representatives and other agents harmless from and
against any and all claims, liabilities, losses, damages or injuries, together
with costs and expenses, including reasonable legal fees, arising out of or
resulting from any breach, material misrepresentation or material omission of
the representations and warranties made by such Primary Shareholder in, and any
breach in any material respect by such Primary Shareholder of any covenant or
agreement contained in or arising out of, Section 4 of such Primary
Shareholder's Employment Agreement.
(c) Sage hereby agrees to indemnify and hold the Shareholders
harmless from and against any and all claims, liabilities, losses, damages or
injuries, together with costs and expenses, including reasonable legal fees,
arising out of or resulting from (i) any breach, material misrepresentation or
material omission in the representations and warranties made by Sage or Merger
Sub in this Agreement, (ii) any breach in any material respect by Sage or Merger
Sub, unless waived in writing by the Shareholders, of any covenant or agreement
of Sage contained in or arising out of this Agreement or any other agreement
delivered in connection herewith on the Closing Date, including, without
limitation, the Employment Agreements or (iii) the guaranties by the Primary
Shareholders of (x) the Company's borrowings from Fleet National Bank after the
Closing Date to the extent authorized by Sage, (y) the Company's bid bond
outstanding on the Closing Date in the aggregate amount of $12,000 and (z) the
Company's computer leases with Dell Financial Services L.P.
(d) Any party claiming a right to indemnification hereunder
(the "Indemnified Party") shall give the other party from whom indemnification
is sought (the "Indemnifying Party") prompt written notice of any claim, demand,
action, suit, proceeding or discovery of fact upon which the Indemnified Party
intends to base a claim for indemnification under this Section 5.01, provided,
however, that no failure to give such notice shall excuse any Indemnifying Party
from any obligation hereunder except to the extent the Indemnifying Party is
prejudiced by such failure. The Indemnified Party shall have full responsibility
and authority with respect to the disposition of any action, suit or proceeding
brought against it; provided, however, that it will not settle any such action,
suit or proceeding without the prior written consent of the Indemnifying Party,
which will not be unreasonably withheld or delayed. In the event any action,
suit or proceeding is brought against the Indemnified Party with respect to
which the Indemnifying Party may have liability under the indemnity agreements
contained in Section 5.01(b) and (c), however, the Indemnifying Party shall have
the right, without prejudice to the Indemnified Party's rights
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under this Agreement, at the Indemnifying Party's sole expense, to be
represented by counsel of its own choosing and with whom counsel for the
Indemnified Party shall confer in connection with the defense of any such
action, suit, or proceeding. The Indemnified Party shall make available to the
Indemnifying Party and its counsel and accountants, all books and records of the
Indemnified Party relating to such action, suit or proceeding and the parties
agree to render to each other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such action, suit or
proceeding.
(e) On the Closing Date, each Shareholder will cause an amount
equal to 10% of each of the cash and shares of Sage Common Stock received by
such Shareholder as Exchange Consideration and Sage will cause the aggregate
Earn-Out Amount (as defined in Exhibit A) (together, the "Escrowed Property") to
be delivered to the escrow agent listed on Exhibit A (the "Escrow Agent") and
held in escrow in accordance with the terms of an escrow agreement to be entered
into between the parties (the "Escrow Agreement") on or prior to the Closing
Date. The Escrowed Property will be held in escrow by the Escrow Agent as
security for any indemnification obligation of the Shareholders to Sage pursuant
to the terms of Section 5.01(b). Indemnity claims by Sage pursuant to Section
5.01(b) shall be satisfied first by the reduction of the Escrowed Property to
the extent allocable to the Shareholder against whom indemnity is sought at its
then current market value until the termination of the Escrow Agreement and
thereafter by the Primary Shareholders, jointly and severally or the
Shareholders, severally, as the case may be. The market value of the Escrowed
Property shall not constitute a limit on the liability of the Shareholders to
Sage hereunder, it being understood and agreed that each of the Primary
Shareholders shall remain jointly and severally liable and each Shareholder
shall remain severally liable, as the case may be, to satisfy the amount of such
claims which exceed the then market value of the Escrowed Property allocable to
such Shareholder.
(f) The aggregate obligations with respect to indemnification
under this Section 5.01 of each of (i) the Shareholders', on the one hand, and
(ii) Sage, on the other hand, shall be limited to an amount equal to $6,334,750
plus the aggregate Earn-Out Amounts to the extent earned in accordance with this
Agreement. Neither the Shareholders' nor Sage shall make any claims for
indemnification under this Section 5.01 unless the aggregate amount of such
claims exceeds $100,000. Notwithstanding the provisions of this Section 5.01(f),
the Shareholders and Sage shall be liable for the full amount of any obligation
with respect to indemnification under this Section 5.01 arising as a result of
(w) any obligation of Sage pursuant to Section 5.01(c)(iii), (x) the willful
misconduct or fraud of the party obligated to provide such indemnification, (y)
a breach or misrepresentation contained in this Agreement by the party from whom
indemnification is sought with respect to tax or environmental matters or (z) a
failure by Sage to pay the Earn-Out Amounts or any amount payable at Closing by
Sage. Notwithstanding any other provision of this Section 5.01(f), the aggregate
liability of the Primary Shareholders under this Section 5.01 and Section 4 of
each Primary Shareholder's Employment Agreement shall not exceed $6,334,750 plus
such Primary Shareholder's Earn-Out Amount to the extent earned in accordance
with this Agreement.
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SECTION 5.02 COMPANY AUDIT.
The Shareholders agree to cause to be performed prior to the
Closing Date, an audit of the Company as at and for the years ended December 31,
1997 and 1998 by a firm of accountants acceptable to Sage. All audited financial
statements prepared in connection with such audit shall meet the requirements
for submission to the Securities and Exchange Commission, shall be prepared by
an accounting firm qualified for such submission and shall be accompanied by
such firm's audit report regarding such financial statements.
SECTION 5.03 TIMECLOCK.
Notwithstanding anything to the contrary contained in this
Agreement, the proprietary software product developed by the Company known as
"Timeclock" shall not be included in the Business or the Company's Assets. The
Shareholders shall cause the grant to Sage and its affiliates of an unrestricted
perpetual royalty free license to use Timeclock pursuant to a license agreement
(the "License Agreement"). After the Closing Date, the Company shall receive
from the owner of Timeclock and any transferee thereof all updates, revisions
and modifications to Timeclock at no charge and in accordance with the License
Agreement. The Shareholders agree that any management time spent on managing the
operations of Timeclock shall be billed to and paid by the owner of Timeclock to
the Company at the Company's normal full rates.
SECTION 5.04 CANCELLATION OF COMPANY STOCK OPTIONS.
Prior to the Closing Date, the Company shall enter into a
stock option cancellation and release agreement (the "Stock Option Cancellation
and Release Agreements") with each holder of options to purchase the capital
stock of the Company, whether or not exercisable and whether or not vested under
the Company's stock option plan, pursuant to which all such options shall be
cancelled by the Company. Sage agrees to pay by check to the holders of such
options as consideration for the cancellation thereof an aggregate amount of not
more than $440,730. At least five business days prior to the Closing Date, the
Company shall provide Sage with written instructions as to the names, amounts
and places to send such payments.
SECTION 5.05 CERTAIN TRANSACTION RELATED FEES.
On the Closing Date, Sage shall pay on behalf of the Company
to certain persons and in the amounts designated by the Company to Sage in
writing at least five business days prior to the Closing Date transaction fees
in an aggregate amount of $141,800.
SECTION 5.06 SALE OF COMPANY MOTOR VEHICLES.
On or prior to the Closing Date, the Company shall sell the
motor vehicles owned by it for a cash amount at least equal to their respective
book values as of December 31, 1998.
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SECTION 5.07 CONDUCT OF BUSINESS PENDING CLOSING.
From the date of this Agreement to the Closing Date, the
Primary Shareholders and the Company (i) will maintain the assets of the Company
and the Company and the Primary Shareholders will not withdraw, expend or apply
any cash or other assets of the Company, except (w) to fully fund the Company's
contributions to the Company 401(k) Plan accrued to the Closing Date, (x) as
provided in Sections 5.03 and 5.06, (y) in connection with this Agreement and
the transactions contemplated hereby (other than legal fees and expenses which
shall be paid by the Shareholders), and (z) in the ordinary course of operations
of the Business of the Company in accordance with past practices of the Company;
(ii) will perform in all material respects their respective obligations under
the contracts and agreements to which the Company is a party; (iii) except as
contemplated in this Agreement, will conduct the Business only in the ordinary
course; (iv) except as otherwise permitted by this Agreement or consented to in
writing by Sage, will not (1) fail to comply in all material respects with any
laws, ordinances, regulations or other governmental restrictions applicable in
any respect to the Business or any of the assets of the Company, (2) grant any
powers of attorney to act for the Business either before or after the Closing
Date, (3) mortgage or pledge or otherwise encumber any of the assets of the
Company except in the ordinary course of business, (4) cancel or terminate any
contract, agreement or other instrument relating to the Business except in the
ordinary course of business, (5) engage in or enter into any transaction with
respect to the Business of any nature not expressly provided for herein, except
for transactions in the ordinary course of business which do not individually or
in the aggregate adversely affect the Business, or (6) make any distribution,
payment or other transfer to the Shareholders other than regular salary and
expense payments consistent with Company's past practices; and (v) will from and
after the date hereof until the Closing Date (1) take such action as may
reasonably be necessary to preserve the assets of the Company wherever located,
(2) maintain inventory of the kinds and in the quantities maintained in the
ordinary course of the Business, (3) maintain its books and records in a manner
consistent with past practices and promptly advise Sage in writing of any
material adverse change in the condition (financial or otherwise) of the assets
of the Company or the Business and (4) except as contemplated in this Agreement
or as may result from the performance of this Agreement, use its best efforts
(at a reasonable cost) to preserve the organization of the Business intact and
continue its operations at its present levels.
SECTION 5.08 POST CLOSING ADJUSTMENT.
Within 30 days following the Closing Date, Sage will prepare a
balance sheet of the Company as of the Closing Date (the "Closing Balance
Sheet") and shall calculate the net worth of the Company as of the Closing Date
(the "Closing Net Worth"). Sage will provide a copy of the Closing Balance Sheet
and such calculation to the Primary Shareholders. If the Closing Net Worth is
less than negative $207,000 (the "Target"), the Shareholders shall pay to Sage
an amount equal to the amount by which the Closing Net Worth is less than the
Target. If the Closing Net Worth is greater than the Target, Sage shall pay to
the Shareholders, ratably in proportion to the number of shares of the Company
owned by such Shareholder on the Closing Date, an aggregate amount equal to the
amount
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by which the Closing Net Worth exceeds the Target. Any such payment shall be
made within 30 days following delivery of the Closing Balance Sheet and such
calculation to the Primary Shareholders. For purposes of this Section only, any
extraordinary accounting fees incurred by the Company related to obtaining on an
expedited basis for purposes of this Agreement only the audited financial
statements for the fiscal years 1997 or 1998 shall not be included in the
computation of Closing Net Worth.
SECTION 5.09 CLOSING OF COMPANY BANK ACCOUNTS.
Promptly following the Closing, the Primary Shareholders shall
provide to Sage evidence acceptable to Sage that the authority of the persons
authorized to sign on behalf of the Company's bank accounts as set forth on
Exhibit 4.01(l)(2) has been terminated or that such accounts have been closed.
ARTICLE VI.
CONDITIONS TO CLOSING; DELIVERIES AT CLOSING
SECTION 6.01 CONDITIONS OF SAGE AND MERGER SUB.
(a) On the Closing Date, the obligations of Sage and Merger
Sub under this Agreement shall be subject to the occurrence of the following
events and the delivery of the following documents, instruments and opinions:
(b) The Primary Shareholders shall have delivered or cause to
be delivered to Sage:
(i) A certificate of the Primary Shareholders to the
effect that (x) each of the representations and warranties of the
Primary Shareholders contained herein is true and correct on the
Closing Date as if such representations and warranties had been made on
the Closing Date and (y) the Company has complied with each of the
covenants of the Company contained in this Agreement.
(ii) A certificate of each Shareholder to the effect
that each of the representations and warranties of such Shareholder
contained herein is true and correct on the Closing Date as if such
representations and warranties had been made on the Closing Date.
(iii) Certificates evidencing the Company Common
Stock, free and clear of all liens and encumbrances of any nature
whatsoever, duly endorsed in blank for transfer or accompanied by stock
powers duly executed in blank and with all requisite documentary or
stock transfer tax stamps affixed.
(iv) The following corporate documentation:
(A) The Company's Articles of Organization,
including all amendments thereto, certified as of a date
within thirty (30) days prior to the
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Closing Date by the Secretary of State of the state of the
Company's organization;
(B) Good Standing Certificates as of date
within thirty (30) days prior to the Closing Date from the
Secretary of State of the state of the Company's organization
and each other state in which the Company is qualified to do
business;
(C) The Company's By-laws certified as of
the Closing Date by the President or Clerk of the Company as
being in full force and effect and unmodified; and
(D) Corporate Resolutions of the Company's
Board of Directors and the Shareholders (if required by the
Company's By-law's or applicable law), approving this
Agreement and all the transactions contemplated hereby,
certified by the President or Clerk of the Company as being in
full force and effect and unmodified.
(c) The legal opinions of counsel to the Company and the
Shareholders, in a form acceptable to Sage and its counsel.
(d) The Escrow Agreement duly executed by the Shareholders.
(e) Evidence satisfactory to Sage that each Existing
Shareholders Agreements has been terminated.
(f) Employment Agreements (collectively, the "Employment
Agreements") between the Company and each of Xxxxxxxx Xxxxxx and Xxxxxxx
Xxxxxxxxx executed by Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxxxxxx, respectively,
together with Subscription Agreements (collectively, the "Subscription
Agreements") and Right of First Refusal Agreements (collectively, the "Right of
First Refusal Agreements") with respect to the shares of Sage Common Stock
delivered to each Shareholder.
(g) Resignations, in writing, of all the directors and
officers of the Company.
(h) Consents to assignments and change in control, if
required, with respect to all Business Agreements (including, without
limitation, Leases and Estoppel Certificates with respect to the Leases).
(i) Consent to a press release in form satisfactory to, and
pre-approved by, the Company and Sage relating to this Agreement and the
transactions contemplated hereby.
(j) Evidence that the motor vehicles owned by the Company have
been sold for a cash amount equal to at least their respective book values as of
December 31, 1998.
22
26
(k) The Stock Option Cancellation and Release Agreements duly
executed by the Company and each holder of Employee Stock Options of the
Company.
(l) The License Agreement duly executed by the parties
thereto.
(m) Evidence that the principal of and interest on, and all
other amounts owing in respect of, the indebtedness of the Company outstanding
on the Closing Date (other than the Xxxxxxxx Note) shall have been (or shall be
simultaneously) paid in full, letters from each lender that is a party to any
commitments to extend credit under the agreements relating to such indebtedness
(other than the Xxxxxxxx Note) to the effect that there is no balance
outstanding under such commitment or evidence that such commitment shall have
been cancelled or terminated and that all guarantees in respect of, and all
liens securing, such indebtedness shall have been released.
(n) Evidence that the principal of and interest on, and all
other amounts owing in respect of, loans to or from the Company to or from its
directors, officers and employees (other than the Xxxxxxxx Note) outstanding on
the Closing Date shall have been (or shall be simultaneously) paid in full.
(o) Evidence that all equity investments by the Company in its
customers shall have been sold by the Company.
(p) Evidence that the Company 401(k) Plan has been terminated
by the Company.
SECTION 6.02 CONDITIONS OF SHAREHOLDERS.
(a) On the Closing Date, the obligations of the Shareholders
under this Agreement shall be subject to the occurrence of the following events
and the delivery of the following documents, instruments and opinions:
(b) Sage shall have delivered or cause to be delivered to the
Primary Shareholders a certificate of an authorized officer of Sage to the
effect that (x) each of the representations and warranties of Sage and Merger
Sub contained herein is true and correct on the Closing Date as if such
representations and warranties had been made on the Closing Date and (y) each of
Sage and Merger Sub has complied with each of the covenants of Sage and Merger
Sub contained in this Agreement to be performed on or before the Closing Date.
(c) The Exchange Consideration in accordance with Section
2.02.
(d) The Escrow Agreement duly executed by Sage and the Escrow
Agent.
(e) Resolutions of the Board of Directors of each of Merger
Sub and Sage, authorizing the execution of this Agreement and the transactions
contemplated hereby, certified by an officer of the Merger Sub and Sage,
respectively, as being in full force and effect and unmodified and a resolution
or unanimous consent of the shareholders of Merger
23
27
Sub approving the merger contemplated by this Agreement certified by an officer
of the Merger Sub, as being in full force and effect and unmodified.
(f) The legal opinions of counsel to Sage, in a form
reasonably acceptable to the Company, Shareholders and their counsel.
(g) Consent to a press release in form satisfactory to, and
pre-approved by, the Company and Sage relating to this Agreement and the
transactions contemplated hereby.
(h) Unaudited financial statements of Sage as at and for the
period ended December 31, 1998, which financial statements shall be reasonably
satisfactory to the Company and the Shareholders.
(i) Evidence that all personal guaranties of the Primary
Shareholders in respect of indebtedness of the Company shall have been released.
ARTICLE VII.
OBLIGATIONS FOLLOWING CLOSING
SECTION 7.01 TAXES.
Sage will prepare or cause to be prepared and timely filed all
Federal, state and local tax returns, estimates and reports with respect to the
Company for all completed periods prior to the Closing Date with respect to
which such filings are not due on or prior to the Closing Date. The Primary
Shareholders, jointly and severally, hereby agree to indemnify and hold Sage and
its officers, directors, stockholders, affiliates, employees, representatives
and other agents harmless from and against any and all claims, liabilities,
losses, damages or injuries, together with costs and expenses, including
reasonable legal fees, arising out of any Federal, state and local tax
liabilities of the Company with respect to periods on and prior to the Closing
Date, except to the extent accrued on the financial statements of the Company as
at and for the period ended on the Closing Date.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.01 GOVERNING LAW; JURISDICTION.
This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts. The parties hereto submit and consent to the
jurisdiction of the state courts of the Commonwealth of Massachusetts and the
State of New York in the Counties of New York and/or Westchester and the federal
courts located therein with respect to any legal actions relating to this
Agreement, or any other agreements delivered in connection herewith, between the
Company and the Shareholders, on the one hand, and Sage, on the other hand, and
any transactions contemplated thereby.
24
28
SECTION 8.02 COUNTERPARTS.
This Agreement may be executed in several counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.
SECTION 8.03 CONFIDENTIALITY.
The Company and the Shareholders, on the one hand, and Sage,
on the other hand, each agree not to disclose or use any information acquired by
it about the other party during the course of the negotiations of this Agreement
and the transactions to which it relates which is confidential in nature or not
otherwise generally available to the public without the prior written consent of
such other party unless required to do so by applicable law or regulation or by
order of a court of competent jurisdiction or an administrative agency. Each
party shall be liable for any breach by its respective employees, officers,
directives, shareholders, agents and/or contractors of the provisions of this
Section 8.03.
SECTION 8.04 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof, and this
Agreement contains the sole and entire agreement among the parties with respect
to the matters covered hereby. This Agreement cannot be changed, modified or
amended and no provision or requirement hereof may be waived without the consent
in writing of the parties hereto.
SECTION 8.05 SEVERABILITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. Each provision
of this Agreement shall be deemed to be the agreement of the parties hereto to
the full extent that the power to enter into such provisions shall have been
conferred on the parties by law.
SECTION 8.06 BENEFIT; ASSIGNMENT.
This Agreement is binding upon and inures to the benefit of
the parties, their successors and permitted assigns. This Agreement may not be
assigned or the duties of the parties hereunder delegated to others without the
prior written consent of all parties hereto, except that Sage may assign its
rights, duties and obligations hereunder without the Company's or the
Shareholders' consent; provided that the assignee shall have revenues and net
worth that are not less than the revenues and net worth of Sage at the time of
such assignment.
SECTION 8.07 CONSTRUCTION.
All exhibits annexed hereto are hereby incorporated herein by
reference and made a part of this Agreement. Whenever used in this Agreement and
the context so requires, the singular shall include the plural and the plural
shall include the singular.
25
29
SECTION 8.08 IMPUTED KNOWLEDGE.
References in this Agreement to the "knowledge of" the Primary
Shareholders, or words of similar import, shall include the knowledge of any and
all of the Primary Shareholders and the officers of the Company which knowledge
shall be imputed to be the knowledge of the Primary Shareholders. References in
this Agreement to the "knowledge of" Sage, or words of similar import, shall
include the knowledge of Xxxxxxx X. Xxxxxxx or Xxxxxxx X. Xxxx which knowledge
shall be imputed to be the knowledge of Sage.
SECTION 8.09 NOTICES.
All notices and other communications hereunder shall be in
writing and deemed to have been duly given when delivered by hand, when received
by registered or certified mail, postage prepaid, return receipt requested, when
given by prepaid courier delivery services such as Federal Express, DHL or other
similar services on the day received, or when given by facsimile transmission
upon receipt by sender of confirmed answer-back, as follows:
(a) if to Sage, at
Sage Networks, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Chief Operating Officer
Telecopier No.: (000) 000-0000
with copies to:
Sage Networks, Inc.
00 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxx, General Counsel
Telecopier No.: (000) 000-0000
and
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: E. Xxx Xxxx, Esq.
Telecopier No.: (000) 000-0000
(b) if to the Company or the Shareholders, at:
Net Daemons Associates, Inc.
000 Xxxx Xxxxxxxx Xxxx, #0000
26
30
Xxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Landay & Xxxxxxx
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
27
31
[SIGNATURE PAGE OF AGREEMENT AND PLAN OF MERGER BY AND AMONG SAGE NETWORKS,
INC., NET DAEMONS ASSOCIATES, INC. AND CERTAIN OTHER PARTIES DATED AS OF
FEBRUARY ___, 1999]
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
SAGE NETWORKS, INC.
[SEAL]
By:/s/Xxxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxx, Co-Chairman
SAGE NDA ACQUISITION CORP.
[SEAL]
By:/s/Xxxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxx, President
NET DAEMONS ASSOCIATES, INC.
[SEAL]
By:/s/Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxxx, President and
Treasurer
SHAREHOLDERS:
By:/s/Xxxxxxxx Xxxxxx
------------------------------------------
Xxxxxxxx Xxxxxx
By:/s/Xxxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxxx
By:/s/Xxxxxxx Xxxxxx
------------------------------------------
Xxxxxxx Xxxxxx
By:/s/Xxxxxxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxxxxxx Xxxxxxxx
28
32
KODIAK TECHNOLOGY VENTURES II, LLP
By: /s/ Xxxxxxx X. Xxxx
------------------------------------------
Xxxxxxx X. Xxxx, its Managing Partner
29
33
LIST OF EXHIBITS:
Exhibit A - Basic Provisions
Exhibit 4.01(b) - Officers; Directors; Trade Names; Jurisdictions
Exhibit 4.01(c)(i)(1) - Closing Cash
Exhibit 4.01(c)(i)(2) - Closing Accounts Receivable
Exhibit 4.01(c)(ii)(1) - Forms of Business Agreements with Customers
Exhibit 4.01(c)(ii)(2) - Summary of Oral Business Agreements and Vendor/Service Provider and Other
Agreements
Exhibit 4.01(c)(ii)(3) - Leases
Exhibit 4.01(c)(ii)(4) - Claims of Disputes Under Business Agreements
Exhibit 4.01(c)(ii)(5) - Consents to Transfer or Assign Not Obtained
Exhibit 4.01(c)(iii) - Tangible Assets
Exhibit 4.01(c)(iv) - Intellectual Property
Exhibit 4.01(c)(v) - Customer List
Exhibit 4.01(c)(vi)(1) - Company's Assets as shown on Financial Statements
Exhibit 4.01(c)(vi)(2) - Liens; Encumbrances
Exhibit 4.01(c)(vii) - Customer Terminations
Exhibit 4.01(d)(1) - Financial Statements
Exhibit 4.01(d)(2) - Bad Debts
Exhibit 4.01(e) - Existing Employment Agreements, Labor or Collective
Bargaining Agreements, Employee
Benefit or Welfare Plans, Description of Employees
Exhibit 4.01(f) - Claims, Litigation and Disclosure
Exhibit 4.01(g) - Tax Liabilities of the Company
Exhibit 4.01(l)(1) - Company's Credit and Debit Cards
Exhibit 4.01(l)(2) - Company's Bank Accounts and Authorized Signatories
Exhibit 4.01(m) - Licenses and Compliance with Laws
Exhibit 5.01(b) - Liabilities
30
34
LIST OF EXHIBITS:
Exhibit A - Basic Provisions
Exhibit 4.01(b) - Officers; Directors; Trade Names; Jurisdictions
Exhibit 4.01(c)(i)(1) - Closing Cash
Exhibit 4.01(c)(i)(2) - Closing Accounts Receivable
Exhibit 4.01(c)(ii)(1) - Forms of Business Agreements with Customers
Exhibit 4.01(c)(ii)(2) - Summary of Oral Business Agreements and Vendor/Service Provider and Other
Agreements
Exhibit 4.01(c)(ii)(3) - Leases
Exhibit 4.01(c)(ii)(4) - Claims of Disputes Under Business Agreements
Exhibit 4.01(c)(ii)(5) - Consents to Transfer or Assign Not Obtained
Exhibit 4.01(c)(iii) - Tangible Assets
Exhibit 4.01(c)(iv) - Intellectual Property
Exhibit 4.01(c)(v) - Customer List
Exhibit 4.01(c)(vi)(1) - Company's Assets as shown on Financial Statements
Exhibit 4.01(c)(vi)(2) - Liens; Encumbrances
Exhibit 4.01(c)(vii) - Customer Terminations
Exhibit 4.01(d)(1) - Financial Statements
Exhibit 4.01(d)(2) - Bad Debts
Exhibit 4.01(e) - Existing Employment Agreements, Labor or Collective Bargaining Agreements, Employee
Benefit or Welfare Plans, Description of Employees
Exhibit 4.01(f) - Claims, Litigations, Disclosure
Exhibit 4.01(g) - Tax Liabilities of the Company
Exhibit 4.01(l)(1) - Company's Credit and Debit Cards
Exhibit 4.01(l)(2) - Company's Bank Accounts and Authorized Signatories
Exhibit 4.01 (m) - Licenses and Compliance with Laws
Documents referred to in the Exhibits as being attached or annexed thereto are
contained in separate binders, which are incorporated herein by reference and
made part of this Agreement as though set forth in full herein.
35
EXHIBIT A
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
BASIC PROVISIONS
1. Name of MERGER SUB: Sage NDA Acquisition Corp.
2. Name of PARENT of MERGER SUB: Sage Networks, Inc.
3. Name of COMPANY: Net Daemons Associates, Inc.
(a) Names, addresses and stock ownership of SHAREHOLDERS of COMPANY:
Name and Address Number of Shares (Type)
Xxxxxxxx Xxxxxx 900,000
00 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx 200,000
00 Xxx Xxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxx 50,000
0 Xxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Xxxxxxxxxxx Xxxxxxxx 45,000
XX Xxx 000
Xxxxxx Xxxxxx, XX 00000
Kodiak Ventures 12,500
XX Xxx X
Xxxxxxxx Xxxxxxx, XX 00000
Total Outstanding Shares: 1,207,500 Shares Common Stock
36
(b) STATE OF INCORPORATION OF COMPANY: Commonwealth of
Massachusetts
(c) FOREIGN QUALIFICATIONS OF THE COMPANY:
California
Colorado
(d) AUTHORIZED OFFICERS OF THE COMPANY:
Xxxxxxxx Xxxxxx Chief Executive Officer, Clerk
Xxxxxxx Xxxxxxxxx President, Treasurer
Xxxxxxx Xxxxxxx Assistant Clerk
(d) Address of each Site from which the Company conducts the
Business:
000 Xxxx Xxxxxxxx Xxxx, #0000
Xxxxxx, XX 00000
0000 Xxxxxxxx Xxxx, #000
Xxxxxxxxxx, XX 00000
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
4. RESIDENCE ADDRESS of each SHAREHOLDER:
Xxxxxxxx Xxxxxx
00 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx
00 Xxx Xxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxx
0 Xxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Xxxxxxxxxxx Xxxxxxxx
XX Xxx 000
Xxxxxx Xxxxxx, XX 00000
2
37
Kodiak Ventures
XX Xxx X
Xxxxxxxx Xxxxxxx, XX 00000
5. EXCHANGE CONSIDERATION:
Cash at Closing: $0.414 per share of Company Common Stock, by
certified or official bank check payable to the
order of the Shareholders, or by wire transfer
of federal funds to the account of the
Shareholders, as the Company and the
Shareholders shall direct in writing on or
before the Closing Date.
Stock at Closing: .352 shares of Sage Common Stock per share of
Company Common Stock.
Earn-Out Amount: Sage will transfer on a pro rata basis
to the Company's shareholders of record on the
Closing Date, additional shares of Sage Common
Stock and cash in the amounts set forth below
(the "Earn-Out Amount"):
SHARES OF SAGE
COMMON STOCK PER CASH PER SHARE
SHARE OF COMPANY AGGREGATE SHARES OF OF COMPANY AGGREGATE CASH
SHAREHOLDER COMMON STOCK SAGE COMMON STOCK COMMON STOCK AMOUNT
----------- ---------------- ------------------- -------------- --------------
Xxxxxxxx Xxxxxx .352 55,873 $0.414 $372,671
Xxxxxxx Xxxxxxxxx .352 12,416 $0.414 $82,815
Xxxxxxx Xxxxxx .352 3,104 $0.414 $20,704
Xxxxx Xxxxxxxx .352 2,794 $0.414 $18,634
Kodiak Ventures .352 776 $0.414 $5,176
The Earn-Out Amount shall be held in escrow
pursuant to the Escrow Agreement and released to
the Shareholders as follows: (a) fifty percent
(50%) of the Earn-Out Amount will be released,
provided that for the period from the Closing
Date to August 31, 1999, the Revenues of the
Surviving Corporation are at least $3,010,000
and the gross margin revenues of the Surviving
Corporation are at least $1,366,000; and (b)
fifty percent (50%) of the Earn-Out Amount will
be released, provided that for the period from
the Closing Date to but not including March 1,
2000, the gross revenues of the Surviving
Corporation are at least $6,066,000 and the
gross margin revenues of the Surviving
Corporation are at least $2,722,000. The
Earn-Out Amount will be paid to the Shareholders
within 60 days after the end of the applicable
period. In the event that the Company does not
attain the target amounts for any of the periods
described above, then
3
38
the Earn-Out Amount for the applicable
periods(s) will be returned to Sage. For
purposes of the calculation of the Earn-Out
Amount only, all internal information technology
consulting services provided by the Company to
Sage will be charged at the Company's normal
billing rates.
SHAREHOLDER AT CLOSING EARN-OUT AMOUNT
----------- ----------------------------- -----------------------
NUMBER OF SHARES AMOUNT OF NUMBER OF AMOUNT OF
OF SAGE COMMON CASH SHARES OF CASH
STOCK SAGE COMMON
STOCK
----------- ---------------- --------- ------------ ---------
Xxxxxxxx Xxxxxx . 316,770 $372,671 55,873 $372,671
Xxxxxxx Xxxxxxxxx 70,393 82,816 12,416 82,816
Xxxxxxx Xxxxxx .. 17,598 20,704 3,104 20,704
Xxxxxxxxxxx 15,839 18,634 2,794 18,634
Xxxxxxxx
Kodiak Technology 4,400 5,176 776 5,176
Ventures II, LLP
------- -------- ------ --------
Total 425,000 $500,000 74,963 $500,000
======= ======== ====== ========
6. COMPANY AND SHAREHOLDERS' BROKER: N/A
7. SAGE'S BROKER: None
8. ESCROW AGENT: Landay & Xxxxxxx
4
39
EXHIBIT 4.01(b)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
OFFICERS:
Xxxxxxxx Xxxxxx, CEO, Clerk
Xxxx Xxxxxxxxx, President, Treasurer
Xxxxxxx Xxxxxxx, Assistant Clerk
DIRECTORS:
Xxxxxxxx Xxxxxx, Chairperson
Xxxx Xxxxxxxxx
Xxxxxxx Xxxx
Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx
TRADE NAMES:
NDA
JURISDICTIONS IN WHICH COMPANY
IS DOING BUSINESS:
JURISDICTIONS IN WHICH NDA CURRENTLY HAS OFFICES:
Boulder, CO
Burlingame, CA
Woburn, MA
JURISDICTIONS IN WHICH NDA IS CURRENTLY PERFORMING SERVICES:
California
Colorado
Georgia
New Hampshire
Massachusetts
Turkey
40
Utah
Washington, DC
Wisconsin
2
41
EXHIBIT 4.01(c)(i)(1)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CLOSING CASH
SEE ANNEXED
42
EXHIBIT 4.01(c)(i)(1)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CLOSING ACCOUNTS RECEIVABLE
SEE ANNEXED
43
EXHIBIT 4.01(c)(ii)(1)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
FORMS OF BUSINESS AGREEMENTS WITH CUSTOMERS
NDA uses a standard form of agreement for customers and subcontractors. In every
case the contract is modified either by client name, signatories, rates,
duration of contract. In almost every case, further modifications are made to
the Master Agreement or Work Order that would make each and every Customer
Agreement a unique contract. NDA has a separate contract "Master Agreement for
WWW" for Internet related service and in almost every case, further
modifications are made to it which would make each and every Master Agreement
for WWW a unique contract. NDA also has a separate agreement for ERT contracts
service and in almost every case, further modifications are made to it, which
would make each and every ERT Agreement a unique contract.. NDA's Master
Agreement, Work Orders and Master Agreement for WWW may have Addendums attached
to them which specify the scope of work during a set duration.
In some cases, NDA will sign a Customer Agreement or accept a Purchase Order or
Sales Order as terms of engagement.
Often, NDA will sign a Customer Non-Disclosure Agreement that has more detailed
terms than NDA's general Non-Disclosure and Confidentiality clauses in the
standard Master Agreement or Work Order.
A copy of every Customer agreement (NDA Master/Master for WWW/Work Order/ERT,
NDA active Addendums, Customer Contract, Customer PO, Customer S/O) still active
for 1998 and 1999 is ANNEXED IN THE NOTEBOOKS LABELED "ANNEX TO EXHIBIT 4.01
(c)(ii)(1)". A schedule of the contracts annexed in the notebooks is ANNEXED.
NDA has another four (4) filing cabinet drawers of expired contracts that are no
longer in effect and would receive a new contract in the event that they are
re-activated.
CONFIDENTIALITY AGREEMENTS
Customer confidentiality agreements are ANNEXED, with a schedule.
44
EXHIBIT 4.01(c)(ii)(2)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
SUMMARY OF ORAL BUSINESS AGREEMENTS, COPIES OF WRITTEN AGREEMENTS AND
VENDOR/SERVICE PROVIDER AGREEMENTS
ORAL AGREEMENTS (COMPANIES IN ITALICS ARE NOT ACTIVE)
BIG BAD DESIGN - Agreement to share leads for creative web design and for NDA to
do back end development and html.
BOSTON PUBLIC LIBRARY - NDA has agreed to notify BPL in the event that we no
longer qualify as a minority owned business.
CLOCKWORK DESIGN GROUP - Agreement to share leads for creative web design and
for NDA to do back end development and html.
THE CONCORDE GROUP - Informal lead sharing agreement with no commission
commitments. NDA will purchase equipment for clients from Concorde and Concorde
will refer NDA to clients for support services.
DIGEX - NDA has a dormant agreement with Digex to lead share and co-market
services. The relationship has been inactive for at least a year. At one time
there was a signed agreement, which is not attached.
EXODUS - Verbal agreement to lead share and provide technical support on
projects.
XXXXXXX DESIGN - Agreement to share leads for creative web design and for NDA to
do back end development and html.
XXXXXXX XXXX - Lead referral agreement, copy of written agreement is missing.
4%/8% commission agreement.
GTE INTERNETWORKING - NDA is a business partner with GTE Internetworking. NDA
collects no fees from the sale of any GTE services and enjoys a discount for use
of GTE services and the ability to offer discounted rates to NDA clients. At
some date in time - perhaps 3 years ago - NDA had a signed agreement with GTE,
which we no longer have a copy of.
INTERACTIVE FACTORY - Agreement to share leads for creative web design and for
NDA to do back end development and html.
XXXXXX XXXX - Lead referral agreement.
XX XXXXXXXX - Lead referral agreement.
IMS - they are a recruiter, we subcontract for them, also signed a lead referral
agreement
ITIC - Mutual lead sharing.
JERBOA - NDA has an oral agreement to collaborate with Jerboa on projects that
include security audits and other technology planning services that NDA may not
offer.
45
XXXXX XXXXXXX - Lead Referral Agreement.
XXX XXXXXX AND XXX XXXXX - Lead Referral Agreement.
XXXXXX XXXXXX - oral agreement for provision of services from time-to-time on an
as-needed basis.
XXXX XXXXXXXXX - oral agreement for provision of services from time-to-time on
an as-needed basis.
MTS BOSTON - unsigned lead referral agreement.
XXXXXX XXXXXXXXXX - Oral agreement for provision of services from time-to-time
on an as-needed basis.
NATURAL INTELLIGENCE - Oral agreement to give NI either directed or
subcontracted referrals for database support on web projects and java
programming assignments. Work is done on an oral subcontractor basis.
NAVISITE - Agreement to share leads for creative web design and for NDA to do
back end development and html.
NEXL - Agreement to share leads.
QUANTIC COMMUNICATIONS - Agreement to share leads for creative web design and
for NDA to do back end development and html.
SNOW COMPUTER SERVICES - Lead referral agreement.
VERIO - Verio has an unsigned written agreement with NDA to allow NDA to provide
consulting services to Verio clients as a Verio-NDA relationship. NDA does not
collect commission from the sale of Verio services. Verio collects the
commission from NDA sales and applies them to a charity of NDA's choice. NDA has
largely sold Verio line services. NDA is in negotiation with Verio to provide
ERT services to Verio and Verio's clients.
- WOBURN - Locally, NDA has provided technical lead support for Verio
clients, has sold leased line services to NDA clients, has sent a flyer
out in both Verio and NDA xxxxxxxx to advertise a strategic
relationship with Verio. Both Verio and NDA have discussed advertising
the relationship in our respective newsletters and on our respective
websites as well as talked about co-marketing campaigns. NDA has
submitted a proposal to Verio for providing Verio customers with ERT
support but has not moved forward after several meetings.
VERIO - Verio has a verbal agreement with the Colorado and California office,
written agreement with Massachusetts.
- COLORADO - NDA and Verio lead share on a handshake agreement.
- CALIFORNIA - NDA created a directory off of xxx.xxx.xxx for Verio
(xxxx://xxx.xxx.xxx/xxxxx/ ). It was intended to be referenced by Verio
sales people when they had a customer on the phone that was interested
in "bundled" service. We were not initially planning to reference each
other on our respective web sites. Someone would have to know the path
(as given to him or her by the Verio Sales Rep) to the above URL to see
that info. Verio Boston and Verio California have been introduced to
this web page but no agreement to move forward was ever made. An
informal/verbal agreement was made with Xxxxx Xxxxxxxxx (Verio-
Northern Cal) that they'd get 10% of NDA revenue for our initial
engagement with their client. Xxxxx didn't want to do anything in
writing, just wanted a handshake.
VISUALINK - Agreement to share leads for creative web design and for NDA to do
back end development and html.
46
WRITTEN AGREEMENTS
XXXXX XXXXXXXX - buyout agreement
XXX XXXXXXXXX - advisory board agreement.
CRAVE - direct competitor, lead sharing and subcontracting, signed a lead
referral agreement.
XXXX XXXX - advisory board/board agreement.
XXXXX XXXXXX - advisory board agreement.
XXXXX XXXXX - xxxxxxxxx agreement
XXXXXXX XXXXXXX - advisory board/board agreement.
XXXX XXXXXX - advisory board/board agreement. (board agreement not attached)
MASSACHUSETTS INTERACTIVE MEDIA COUNCIL - they give us access to their
membership, the member database, a link from their site, and have offered to let
us co-host a Cyberbrew in exchange for a half-day of junior support every other
month. (ANNEXED in 4.01c(ii)(1))
MASSACHUSETTS DEPARTMENT OF EDUCATION - NDA is a Mass DOE approved vendor. This
allows NDA to bid on k-12 jobs across the state of Massachusetts and to be
considered for support of the DOE. This contract gives us favorable treatment
for City of Boston contracts.
MICROSOFT - NDA is a Microsoft Solutions Partner Provider
MIT LINCOLN LABORATORY - NDA is an approved contractor at MIT Lincoln Laboratory
and has applied for and is awaiting clearance for a Top Secret level facility
clearance. (contract ANNEXED in 4.01c(ii)(1)).
NETRACK - Lead referral agreement.
XXXXXXX XXXXXX - advisory board agreement.
XXXXX XXXXXX - Lead referral agreement.
SUN - NDA is an approved Sun vendor, which enables NDA to bid on internal Sun
jobs.
TMP WORLDWIDE - assignability from TMP purchase of Adion and transfer of
intellectual property from NDA to The Monster Board
VENDORS THAT NDA CONTRACTS FOR SERVICES (VENDORS IN ITALICS HAVE NO ANNEXED
AGREEMENT)
Full vendor list is
ANNEXED AL SYSTEMS - Label printer
ADP - payroll, 401(k)
ALTERNATIVE SOLUTIONS - Phone and voicemail support
AT&T - Cell phones, CO Office
BELMONT SPRINGS WATER - bottled water delivery
BOISE CASCADE - Office supplies
Cellular One - Cell phones, one CA contract becomes month to month 3/1/99 CT
CORP - Legal support for offices outside of NDA's State of Incorporation
CU INSURANCE - Umbrella, Liability and Insurance DM PRODUCTIONS - DJ service for
events
DELOITTE AND TOUCHE - audit and financial services
DELTA DENTAL - insurance
provider (annexed in 4.01 (e))
DUN + BRADSTREET - used by NDA for collections
EMERALD BAY - Bottled water, CA office
FEDEX - Overnight delivery
FLEET BANK
47
XXXXX XXXXXXX - corporate tax counsel GTE - Internet Service Provider
THE HARTFORD - insurance provider (annexed in 4.01 (e)), auto insurance annexed
XXXXX TIRE - Auto repair
HERTZ - car rental service
HOT CHILI TECHNOLOGY - recruiting database service
HOT JOBS - recruiting website service
IKON - Copier and fax service
INSIGHT - Computer accessories
JUNGLE - T-shirts and embroidery
KEYSTONE PRESS - Printer
KING AND XXXXXX - Provide contractors for recruitment
LANDAY AND XXXXXXX - legal services
LASER SERV - Printer Service
MACTEMPS - Contract house
XXXXX XXXXXXXXX - Massachusetts cleaning services
MASS MUTUAL - insurance provider (annexed in 4.01 (e))
METRO CALL - Beeper service
METRO MEDICAL ANSWERING SERVICE - Answering service for ERT
THE MONSTER BOARD - recruiting website service
NECS - Copier and fax toner
NEWBRIDGE ASSOCIATES - Provides merger and acquisition services
NEW ENGLAND SHUTTLE - Courier
NEXTEL - Cell phones
P&M LOCKSMITHS - Lock service
PAGENET - Beeper service
PROVIDER INSURANCE - Insurance agent
XXXX XXXXXX - insurance provider (annexed in 4.01 (e))
RED ROOF INNS - 5% discount on hotel services for NDA
XXXXXXX AND ASSOCIATES - Performed valuation for NDA
SETON NAMEPLATE - Asset tags
SIERRA SUITES - Extended stay hotel
SILICON VALLEY BANK SPRINT - Cellular service, CA office
STAPLES - Office supplies
SUBURBAN COACH - Airport limo service
SUMMIT COMMUNICATIONS - Wiring subcontractor
THE TRAVEL COLLABORATIVE - $15/ticket charge, travel agent services
TUFTS - MASSACHUSETTS HEALTHCARE PROVIDER (ANNEXED in 4.01 (e))
UNITED Healthcare - California and Colorado healthcare provider (ANNEXED in 4.01
(e))
UNISHIPPERS - Overnight delivery service
UNITED PARCEL SERVICE - Shipping service UNITED STATES POSTAL SERVICE - Postage
SUBCONTRACTORS 1099 list is ANNEXED.
48
XXXX XXXXX - signed agreement
XXXX XXXXX - signed agreement
XXXX XXXXXXX - signed agreement (for King and Xxxxxx)
XXX XXXXX - signed agreement
XXXXX XXXXXXXXXXX - signed agreement
XXXXXXXX XXXXXX - signed agreement
INTRANET TECHNOLOGY SERVICE GROUP - signed agreement
XXXXXXX XXXXX - signed agreement
XXXX XXXXXX - signed agreement
XXXXXX XXXXXX - signed agreement
XXXXX XXXX - signed agreement
XXXXX XXXXXX - signed agreement
XXXX XXXXXXXX - signed agreement
VISTA - Vista does DOE work through NDA as they are not an approved DOE vendor.
NDA PURCHASE ORDERS are ANNEXED.
LEASES are ANNEXED in 4.01 (c)(ii)(3).
LOAN AGREEMENTS
A schedule of and copies of loan agreements are ANNEXED.
49
EXHIBIT 4.01(c)(ii)(3)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
LEASES
NET DAEMONS ASSOCIATES, INC.
LEASE SCHEDULE
AS OF JANUARY 26, 1998
LESSOR PROPERTY MONTHLY DATED TERM (MO'S)
------ -------- ------- ----- -----------
Xxxxxxxx Properties NDA Woburn, MA Office 12,272.41 2/28/97 36
000 Xxxx Xxxxxxxx Xxxx 000 Xxxx Xxxxxxxx Xxxx Xxxxx 0000
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Burlingame Executive Center NDA Burlingame, CA Office 3,611.00 6/1/97 36
Investment
XX Xxx 00 0000 Xxxxxxxx Xxxx Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Xxxx Doctor Bedroom for East Coast Travelers 500.00 2/1/98 Mo-Mo
0 Xxxxxxxxx Xxxxx 0 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
NeTrack NDA Boulder, CO Office 400.00 4/1/97 Mo-Mo
0000 Xxxxxxx Xxxx 0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000-0000 Xxxxxxx, XX 00000-0000
IOS Capital Canon NP 6050 Copier 379.00 4/25/97 36
XX Xxx 00000 Xxxxx #000000
Xxxxxxxxxxxx, XX 00000-0000
GE Capital Voicemail System 279.17 10/28/97 36
0000 Xxxxxxxx Xxxx XX Agreement # 00000000-000
Xxxxx Xxxxxx, XX 00000
DFS Acceptance Lease #005013966-009 - 3 Laptops 350.86 1/29/99 36
XX Xxx 0000 Lease #006287487-001 - 1 Laptops 126.78 12/23/98 00
Xxxxx Xxxxxx, XX 00000-0000 Lease #005013966-008 - 1 Laptops 106.90 1/18/99 36
Lease #005013966-007 - 1 Laptops 140.17 10/22/98 36
Lease #005013966-006 - 2 Laptops 255.37 6/18/98 36
50
LESSOR PROPERTY MONTHLY DATED TERM (MO'S)
------ -------- ------- ----- -----------
Lease #005013966-005 - 1 Laptops 143.67 4/23/98 36
Lease #005013966-004 - 1 Laptops 96.51 4/12/98 36
Lease #005013966-002 - 4 Laptops 526.30 4/3/98 36
Transamerica Vendor Financial Master Lease #35-10190 - 1 Laptop 131.39 6/5/98 36
Services
0000 Xxxxxxxx Xxxx Master Lease #15354 - 1 Laptop 124.02 9/18/98 36
Xxxxxxx Xxxxxxx, XX 00000
51
EXHIBIT 4.01(c)(ii)(4)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CLAIMS OF DISPUTES UNDER BUSINESS AGREEMENTS
Financial Technology Ventures has disputed NDA's time as a result of loss of
information. NDA has provided a detailed timeline of events and a recommended
write-down. This is the most substantive request for write-down in effect.
Detailed letter to client is ANNEXED.
52
EXHIBIT 4.01(c)(ii)(5)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CONSENTS TO TRANSFER AND ASSIGNMENT NOT OBTAINED
Each of the scheduled vendors/customers includes assignment language in the
contracts.
1. BOSTON PUBLIC LIBRARY - oral agreement to notify BPL in the event that we
no longer qualify as a minority own business.
2. COMMERCIAL UNION - all policies (see ANNEXED contract in 4.01 (c)(ii)(2))
3. CDI CORPORATION - (see ANNEXED contract in 4.01 (c)(ii)(1))
4. CRAVE TECHNOLOGIES - verbal approval (see ANNEXED contract in 4.10
(c)(ii)(2))
5. GE CAPITAL EQUIPMENT LEASE AGREEMENT (see ANNEXED agreement in 4.01
(c)(ii)(3))
6. THE HARTFORD (Workers Compensation and Employers Liability Insurance
Policy)(see ANNEXED contract in 4.01 (e))
7. ISIS DISTRIBUTED SYSTEMS (see ANNEXED non-disclosure agreement in 4.00
(c)(ii)(1))
8. MICROSOFT SOLUTION PROVIDER agreement (see ANNEXED contract in 4.00
(c)(ii)(2))
9. XXXX XXXXXX LIFE INSURANCE COMPANY (Long Term Disability Group)(see ANNEXED
contract in 4.01 (e))
53
EXHIBIT 4.01(c)(iii)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
TANGIBLE ASSETS
SEE ANNEXED
54
EXHIBIT 4.01(c)(iv)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
INTELLECTUAL PROPERTY
Contents of the hard drives and any removable media for each computer in the
Asset list annexed in Schedule 4.01(c)(iii). Full backups of the servers nda,
taz, diabolos, gluttony and fudd as well as a full backup of the laptop in use
by Xxxxx XxXxxxx are included as the ANNEX to this item. An incremental backup
of the aforementioned list of computers will be ANNEXED within 3 days after
closing in order to enable a complete record of the intellectual property,
absent any publicly available software packages, that resides on the servers at
NDA. Any content that exists on laptops and PCs not included in the backups and
has a creation date prior to the closing date of this document shall also be
considered as NDA's Intellectual Property. Any backup tape of any level
maintained by NDA either at NDA facilities or in external facilities shall also
be considered the Intellectual Property of NDA.
BEEHIVE DATABASE. This database records question and answer exchanges and as a
results creates a database that manages all the knowledge sent through it.
CONTRACT DATABASE. This is an access database that NDA uses to manage all of our
contract and account information and to publish information to the NDA intranet.
COURSE MATERIAL developed in conjunction with The Computer Museum. Course
material is the mutual \intellectual property of both Net Daemons Associates,
Inc. and The Computer Museum.
COURSE MATERIAL developed for classes taught at Boston Center for Adult
Education, Merrimack College, Cybersmith and Xxxxxxx Xxxxxxx & Waltch (AEW).
XXXX XXXXXXXX'X CONFERENCE PRESENTATIONS:
- Panelist, "Managing a Large Web Site," The 6th International
World Wide Web Conference, April, 1997
- Panel speaker, "Web Server Performance Analysis and Tuning,"
Internet World, December, 1997
- Panel moderator, "Web Server Performance Analysis and Tuning,"
Internet World, March 1998, July, 1998, October 1998, and May
1999
55
- Technical presentation, "Large Volume Web Site Architecture,"
Internet World, October, 1998 and May 1999
EMPLOYEE DATABASE. This is a database that NDA uses to manager all of our
employee information and to publish information to the NDA intranet.
ENTREWORLD articles. See ANNEXED license agreements and articles.
GOLDMINE database is used both by recruiting and sales to gather leads for past,
present and future client leads, recruiting leads and employees. Separate
database copies exist in MA, CA and CO.
HOT CHILI DATABASE - online recruiting database of resumes.
NDA'S WEBSITE (xxxx://xxx.xxx.xxx)
NDA'S INTRANET (xxxx://xxx.xxx.xxx/xxxxx as well as any trees below this
directory)
NDA'S CA INTRANET (xxxx://xxx.xxx.xxx/xxxxx as well as any trees below this
directory)
NDA'S INTERNAL WEBSITE FOR THE INTERNET SERVICES GROUP
(xxxx://xxx.xxx.xxx/xxxxx/xxx as well as any trees below this directory)
NDA'S INTERNET SERVICES GROUP project listing. ANNEXED.
NDA'S strategic plans, operations plans and budget.
Random PRESENTATIONS by XXXXX XXXXXX at a variety of conferences.
NETWORK WORLD article written by Xxxxx Xxxxxxxx. See ANNEXED.
PEACHTREE and QUICKEN and QUICKBOOKS account databases.
TECH MAIL ALIAS. This mail alias archives the e-mail exchanges between our
engineers which constitutes an extensive knowledge pool.
TELECONFERENCE article written by Xxxx Xxxxxxxx. See ANNEXED.
TMP WORLDWIDE agreement for transfer of intellectual property from NDA to TMP
Worldwide for some code and assigns joint intellectual property rights for other
code. See ANNEXED in 4.01 (c)(ii)(2).
In 1993 a claim was asserted against NDA under M.G.L. c.93A (Unfair Trade and
Deceptive Practices Act). A response was provided and the claimant did not
pursue the matter.
56
The following TOOLS AND ANY RESPECTIVE DOCUMENTATION are the sole intellectual
property of Net Daemons Associates, Inc.
dvltools - Tools for managing software control
itrack - Program to track events, bugs and issues
nae - Software to manage system config files for UNIX
netbackup - Software to manage backups across multiple systems
ses - Encrypted interactive sessions
sched - CGI code to maintain employee schedules
res - Knowledge database
alliknow - Company skills database
warden - Software to watch system status
visys - automates the check in / check out of system files (or any file) -
basically a wrapper for rcs.
The following COMPUTER programs and any respective documentation are the sole
intellectual property of Net Daemons Associates, Inc.
They reside on xxx.xxx.xxx in the /usr/nda/bin directory:
411 aliases 2db unco
Addheader aliastable update_nearnet
Build all_status usergone
Buildcomp backuplog usergone.sales
Checkincomp changed_articles
Cleancomp cleanlogs The following databases
Comp clone which reside in
Compilecomp deactivateuser /usr/nda/nae
E ducfg aliases
Editcomp gencfg exemployees
Emacs hosts2db machines
Getcomp netbackup
Maketape ohours itrack
New ohours2 The 411 database
Newcomp passwd2db Employees.db
Sincecomp path
Transportcomp pi Phones.cgi
Updatecomp refreshuser Stars.cgi
Uptodate reminder Aliases.cgi
Vi sclient Org.cgi
activateuser setaliases Alliknow.cgi
addtazuser tapedup
age tapesize Invctl.cgi
57
NDA is a licensee from TIMEUTIL LLC of the following tools, programs, and any
respective documentation.
timeclock - Software to plog accounts
maintain time slip printinvoices variables
database xxxxxxxxxxxxx.xx Timeclock
accounttable rmuser Tcutil
hours tcinfo Employees.cgi
hours.odb tcinforeport Webhours.cgi
machinetable timecal Web scheduler
mgreport timeclock.hide Webhours
mkuser timeclock.maybe Timecal.cgi
nae xxxxxxxxx.xxx Account.cgi
TELEPHONE NUMBERS:
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
000-000-0000
FACSIMILE NUMBERS:
000-000-0000
000-000-0000
000-000-0000
58
CELLULAR PHONE NUMBERS AND BEEPER NUMBERS:
ANNEXED in company phone list.
INTERNET DOMAIN ADDRESSES:
Xxx.xxx
xxxx://xxx.xxx.xxx
e-mail ADDRESSES:
ANNEXED.
TRADE NAMES:
NDA, Inc.
REGISTERED COPYRIGHT,
PATENT AND TRADEMARKS
None
NDA LOGO'S, LETTERHEAD, MARKETING MATERIAL
ANNEXED.
COMMERCIAL SOFTWARE PACKAGES WHICH NDA HOLDS LICENSES FOR
VENDOR SOFTWARE PACKAGE
------ ----------------
Peachtree Peachtree
Real Networks RealAudio
Abuzz beehive
Adobe Photoshop
Adobe Illustrator
Adobe Pagemill
Apple MAC OS 8 upgrade
Checkpoint Firewall-1
Claris Corporation FileMaker Pro 3.0
ClipArt CD
F-Secure SSH
GoldMine GoldMine 3.0
Intuit Quickbooks
Lotus Lotus 1-2-3
Lotus Lotus Organizer
MacAfee VirusScan
59
VENDOR SOFTWARE PACKAGE
------ ----------------
IMSI MasterClips CDROM
Microsoft FrontPage 97
Microsoft NT Workstation 4
Microsoft FrontPage 98
Microsoft MS Office 4.2.1 (Mac)
Microsoft MS Office Pro 95
Microsoft MS Project 98
Microsoft MS Office 97
Microsoft MS Office 97 Upgrade
Microsoft MS Office 98 MAC
Microsoft RTU and media for server
Microsoft MS Windows NT Server 4 w/ 5 CAL
Midnight Networks ReconMap
Net.Genesis Net.analysis Pro
NetManage Chameleon NFS
NetObjects Coldfusion 3.1 Studio
NetObjects Fusion
Netscape Netscape browsers
Norton Norton Disk Doctor
Novell IP for Novell 3.12
Novell Novell 4.11
Odesta Corporation Double Helix
ON Technology MEETING MAKER
Qualcomm Eudora
Quark Quark Xpress
Sun Solaris 2.6 Upgrade Kit
Symantec ACT! 3.0
Virtuflex Virtuflex Software
Visio Visio Std. V. 5.0
Visio Visio 5.0 Upgrade
Visio Visio Professional v. 5.0 and HD
60
EXHIBIT 4.01(c)(v)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CUSTOMER LIST
ANNEXED is NDA's current Customer List. A copy of NDA's client/potential client
list from our Goldmine database is available, as needed.
61
EXHIBIT 4.01(c)(vi)(1)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
COMPANY'S ASSETS AS SHOWN ON FINANCIAL STATEMENTS
SEE ANNEXED
62
EXHIBIT 4.01(c)(vi)(2)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
LIENS; ENCUMBRANCES
UCC Searches are ANNEXED.
Xxxxxxxx Properties Management, Inc. - Landlord has been granted lien in all
office and other equipment, furniture, and inventory of lessee located at the
Woburn office.
Dell Financial Services, LP.
Fleet National Bank
Fleet National Bank Business Loan Center
Transamerica Vendor Financial Service Corp.
855,000 shares of Treasury Stock have been pledged to Xxxxx Xxxxxxxx under
agreement ANNEXED in 4.01 (c)(ii)(2).
63
EXHIBIT 4.01(c)(vii)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CUSTOMER TERMINATIONS
A list of contracts expiring over the next 90 days is ANNEXED. The following
schedule provides supplementary information to the ANNEXED list, specifically
changes in scope.
Date of Change Description
-------------- -----------
ATI Research Inc. 1/22/99 Reduced coverage - dropped 2dpw Sr
CDI Corporation 1/31/99 Assignment Ended
Cisco Systems, Inc. 12/15/98 Assignment Ended
Cobalt Systems 1/22/99 QA Assignment Ended
Xxxxxxxxx Research 2/15/99 Assignment Ends
Hitachi Computer Corp. 3/31/99 Assignment Ends
Opta Food Ingredients 2/15/99 Reduced coverage
O'Reilly 3/15/99 Contract ends
Shiva 1/22/99 Contract Ended
Sitara 2/28/99 Rumor that assignment will end
Texterity, Inc 2/15/99 Hired Full-Time
TMP Interactive 1/15/99 All material assignments have ended
64
EXHIBIT 4.01(d)(1)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
FINANCIAL STATEMENTS
SEE ANNEXED
65
EXHIBIT 4.01(d)(2)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
BAD DEBTS
SEE ANNEXED
66
EXHIBIT 4.01(e)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC. EXHIBIT 4.01(e)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
EXISTING CONSULTING AGREEMENTS, LABOR
Except for the ANNEXED list of employees, each has a signed offer of employment
and signed NONCOMPETITION, NONDISCLOSURE AND INVENTIONS AGREEMENT. Each employee
in the ANNEXED Description of Employees is also eligible for stock option awards
under NDA's Employee Stock Option Plan, benefit plans, which are referenced by
the page number in which they are described by NDA's Personnel Policies Manual,
which is ANNEXED. Additional insurer information is also listed in the following
schedule:
The Benefits Package .................................................................................. 25
Health Benefits ....................................................................................... 25
Finance Benefits ...................................................................................... 25
Employee Performance and Recognition Benefits ......................................................... 26
Paid Leaves of Absence.................................................................................... 27
Holidays .............................................................................................. 27
Holiday Policies ...................................................................................... 27
Unpaid Leaves of Absence.................................................................................. 29
Disability Leave of Absence ........................................................................... 29
Educational Leave of Absence .......................................................................... 30
Military Leave of Absence ............................................................................. 30
Personal Leave of Absence ............................................................................. 31
Insurance Premium Payment During Leaves of Absence .................................................... 31
Insurance Coverage ....................................................................................... 32
Group Insurance ....................................................................................... 32
Disability Insurance .................................................................................. 32
Short Term Disability ................................................................................. 33
Maternity Leave ....................................................................................... 33
Long term Disability .................................................................................. 33
Health/Dental Insurance ............................................................................... 34
67
Life Insurance ........................................................................................ 34
Termination of Insurance .............................................................................. 34
Government Required Coverage.............................................................................. 35
Workers' Compensation ................................................................................. 35
Unemployment Compensation ............................................................................. 37
Social Security ....................................................................................... 37
Vacations ................................................................................................ 38
Amount of Vacation .................................................................................... 38
Vacation Policies ..................................................................................... 38
Accumulation Rights ................................................................................... 39
Short Term Absences ...................................................................................... 40
Sick Leave ............................................................................................ 41
Other Benefits ........................................................................................... 42
Annual Party or Outing ................................................................................ 42
Athletic and Recreation Programs ...................................................................... 42
Education/Training (Attending Seminars/Training Sessions) ............................................. 42
Fitness Allowance ..................................................................................... 42
The Stars Program ..................................................................................... 43
Greenback Star Program ............................................................................... 43
A further policy, not referenced in the annexed document but attached to the
physical Personnel Policy Manual, is the additional Sabbatical Policy:
SABBATICAL POLICY
DESCRIPTION
Sabbatical is a 6-week paid leave of absence for NDA employees. Its
primary purpose is to reward long-time employees, offer them an
opportunity to develop themselves in some new way, and of course give
them time to recharge their batteries.
The sabbatical can be used to achieve any one of the following goals:
1. Learn a new skill or refine an existing skill
2. Volunteer with a non-profit organization
3. Challenge oneself (climb large mountains, sail a boat to
Africa)
4. Realize a dream
REQUIREMENTS
Employees are eligible for a sabbatical after every 5th year of
employment. They may take the sabbatical anytime (subject to approval)
during the two years following their 5th year anniversary. Failure to
take sabbatical after the 7th year will result in forfeiture of the
sabbatical.
2
68
The sabbatical is a paid leave, during which the employee will receive
full compensation and benefits.
The employee must submit a sabbatical request to their manager and
director of their department 90 DAYS PRIOR TO TAKING THE SABBATICAL.
After completing the sabbatical, the employee must also submit a
summary of the sabbatical to their manager. This must be completed
within 30 days of returning to work.
RESTRICTIONS
Vacation time and floating holidays cannot be used to extend the
sabbatical beyond 6 weeks.
Employees not in good standing (i.e. on probation or warning) are not
eligible for sabbatical until they return to good standing.
SCHEDULE OF INSURANCE CARRIERS:
INSURANCE TYPE MASSACHUSETTS CALIFORNIA COLORADO
-------------- ------------- ---------- --------
Medical Tufts HMO United Healthcare United Healthcare
Dental Delta Dental Delta Dental Delta Dental
Life Phoenix Phoenix Phoenix
Long-term disability Xxxx Xxxxxx Xxxx Xxxxxx Xxxx Xxxxxx
Short-term disability Xxxx Xxxxxx Xxxx Xxxxxx Xxxx Xxxxxx
Workers Compensation The Hartford The Hartford The Hartford
Unemployment FUTA & SUTA FUTA & SUTA FUTA & SUTA
Key person insurance (Xxxxxxxx Mass Mutual N/A N/A
Xxxxxx, Xxxxx Xxxxxxxx, Xxxx
Xxxxxxxxx)
401(k) ADP ADP ADP
Actual copies of policies are ANNEXED.
DESCRIPTION OF EMPLOYEES
SEE ANNEXED.
QUALIFYING LETTERS FOR ERISA
SEE ANNEXED.
3
69
EXHIBIT 4.01 (f)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
CLAIMS, LITIGATION, DISCLOSURE
On January 7, 1999, an incident between two employees was brought to the
attention of Xxxxxxxx Xxxxxx. In accordance with NDA's Personnel Policy Manual,
Xxxxxxxx interviewed each employee (with witnesses), summarized each employees
account of the incident, and recommended a resolution. The resolution was
accepted and signed by both parties and is up for review in early April. If all
terms have been satisfied in April, this incident report will be closed but
remain as a part of each employee's personnel file.
70
EXHIBIT 4.01 (g)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
TAX LIABILITIES OF THE COMPANY
SEE ANNEXED
71
EXHIBIT 4.01(l)(1)
TO
AGREEMENT AND PLAN OF MERGER
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
COMPANY'S CREDIT CARDS
TYPE EMPLOYEE ISSUED TO ACCOUNT NO.
---- ------------------ -----------
American Express Xxxxx Xxxxxx 0000-000000-00000
American Express Xxxxx Xxxxxxxx 0000-000000-00000
American Express Xxxx Xxxxxxxxx 0000-000000-00000
American Express Xxxxx Xxxxx 0000-000000-00000
American Express Xxxx Xxxxxxxx 0000-000000-00000
American Express Xxxx Xxxxxxxx 0000-000000-00000
American Express Xxx Xxxxxx 0000-000000-00000
American Express Xxxxx Xxxxxxx 0000-000000-00000
American Express Xxxxx Xxxxxxxxxxx 0000-000000-00000
American Express Xxxx Doctor 0000-000000-00000
American Express Xxxxxxx Xxxxxx 0000-000000-00000
American Express Xxxx Xxxxxxxx 0000-000000-00000
American Express Will Xxxxxxxxx 0000-000000-00000
American Express Xxxxxxx Xxxxx 0000-000000-00000
American Express Xxxxx Xxxxxx 0000-000000-00000
American Express X'Xxxxxxxx, Xxxxx 0000-000000-00000
Fleet Master Card Xxxxx Xxxxxx 0000-0000-0000-0000
Fleet Master Card Xxxx Xxxxxxxxx 0000-0000-0000-0000
Staples Office 7972-5600-0002-1834
72
EXHIBIT 4.01(l)(2)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
COMPANY'S BANK ACCOUNTS AND AUTHORIZED SIGNATORIES
BANK NAME AND ADDRESS ACCOUNT # TYPE AUTHORIZED SIGNATORIES
--------------------- --------- ---- ----------------------
Fleet Bank 9398800104 Savings Xxxxx Xxxxxx
Xxxx Xxxxxxxxx
Fleet Bank 9374040710 Operating Xxxxx Xxxxxx
Xxxx Xxxxxxxxx
Fleet Bank 9402167787 Payroll Xxxxx Xxxxxx
Xxxx Xxxxxxxxx
Bank of America 01444-09139 CA Operating Xxxx Xxxxxxxxx
Xxxx Xxxxxxxx
Norwest Bank 182 0000000 CO Operating Xxxx Xxxxxxxxx
Xxxxx XxXxxxx
Silicon Valley Bank 3300098014 MA Checking Xxxxx Xxxxxx
Xxxx Xxxxxxxxx
Silicon Valley Bank 3300129104 MA Checking Xxxxx Xxxxxx
Xxxx Xxxxxxxxx
Silicon Valley Bank 3300129062 Money Market Xxxxx Xxxxxx
Xxxx Xxxxxxxxx
73
EXHIBIT 4.01(m)
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SAGE NETWORKS, INC.
AND
NET DAEMONS ASSOCIATES, INC.
CERTAIN OTHER PARTIES
LICENSES AND COMPLIANCE WITH LAWS
NDA has applied for a site clearance (DoD Top Secret) to allow us to bid on
classified jobs at MIT Lincoln Laboratory. This application process requires
that Xxxxxxxx Xxxxxx and Xxxxxxx Xxxxxxxxx personally apply for Top Secret
Clearances. The clearances were applied for in November 1998 and could take up
to a year to become accepted or declined. There is no document regarding this
matter that can be annexed.
NDA contracts with Boston Public Library and is considered more favorably than
other contractors due to a minority owned business (NDA qualifies through
Xxxxxxxx Xxxxxx'x majority shareholder position) status. This status is helpful
to NDA in bidding on jobs that are in the public sector (City of Boston, City of
Cambridge, City of Winchester, Boston Public Schools) but there is nothing
preventing NDA from bidding on these jobs without minority ownership status. NDA
has made a verbal agreement with Boston Public Library to notify them in the
event that NDA no longer enjoys a minority owned business status.
In order for NDA to perform network consulting work in K-12 schools in
Massachusetts, NDA had to become a DOE vendor. NDA is currently approved as a
DOE vendor.
